Ashley Holds a 65% Interest in a Business Entity

Essay

Ashley holds a 65% interest in a business entity. Her basis for 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.