On January 1, 2021, Leo paid $24,000 for 7 percent of the stock in BLS, an S corporation. In November, he loaned $12,000 to BLS in return for a promissory note. BLS generated a $690,000 operating loss in 2021. BLS generated $417,000 ordinary business income in 2022.

Required:
-How much of Leo’s share of this income is included in his 2022 taxable income?
-Compute Leo’s basis in his BLS stock and his BLS note at the end of 2022.
-How would your answers to parts a and b change if BLS’s ordinary business income was only $229,000?