Parker is a 100% shareholder of Johnson Corp. (an S corporation). At the beginning of 2010, Parker's basis in his Johnson Corp. stock was $14,000. During 2010, Parker loaned $20,000 to Johnson Corp. and Johnson Corp. reported a $25,000 ordinary business loss and no separately stated items. In 2011, Johnson Corp. reported $8,000 of ordinary business income.
a. How much of the $25,000 ordinary loss allocated to Parker clears the tax basis hurdle for deductibility in 2010?
b. What is Parker's stock and debt basis at the end of 2010?
c. What is Parker's stock and debt basis at the end of 2011?