Ashley Has a 65% Interest in a Business Entity

question 163

Essay

Ashley has a 65% interest in a business entity. Her basis for her ownership interest is $300,000. The net income of the business for the tax year is $100,000 and the entity liabilities have increased by $60,000. Determine the effect of the earnings and the liabilities on Ashley's basis for her ownership interest if the business is:
a. A C corporation.
b. An S corporation.
c. A partnership.

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Definitions:

Consolidated Omnibus Budget Reconciliation Act

A federal law in the United States that, among other things, provides individuals and their families the option to continue healthcare coverage when it would otherwise be lost due to certain life events.

Emergency Medical Treatment

The immediate assessment and intervention provided to individuals with acute illness or injury, typically delivered by first responders, emergency medical technicians, or hospital emergency departments.

Active Labor Act

Known as the Emergency Medical Treatment and Active Labor Act (EMTALA), a U.S. federal law that mandates emergency healthcare services to be provided irrespective of the patient's ability to pay.

Health Insurance Portability

The ability of individuals to maintain their health insurance coverage when changing jobs, reducing the risk of being uninsured due to pre-existing conditions or gaps in employment.