LO1,2 Natrone pays $35,000 for stock in an S corporation and receives shares equal to a 20% interest in the corporation in the current year. At the same time, he pays $35,000 for a 20% interest in a general partnership. Both entities incur mortgage debt of $60,000 during the current year, and both report ordinary taxable income of $20,000. What is the maximum cash distribution each entity can make to Natrone this year with- out causing him to recognize income? Write a memo to Natrone explaining your answers in terms of the underlying concepts and facts that support your calculations.
<em>No answers yet</em>