Mira and Lemma are equal owners of a business entity. Each contributed $96,000 cash to the business. Then the entity acquired a $384,000. loan from a bank. This year operating profits totaled $115,200. Determine Lemma’s basis in her interest at the end of the tax year assuming that the entity is a partnership, a C corporation, or a S corporation.
a. If the entity is a partnership, Mira and Lemma each have a basis of $_____
at the end of the year.
b. If the entity is a C corporation, Mira and Lemma each have a basis of $_____
at the end of the year.
c. If the entity is an S corporation, Mira and Lemma each have a basis of $_____
at the end of the year.