on january 1, year 1, ginger, an individual, paid $27,000 for 7 percent of the stock in root corp., an s corporation. in november year 1, he loaned $9,000 to root corp. in return for a promissory note. root corp. generated a $720,000 operating loss in year 1. root corp. generated $420,000 ordinary business income in year 2.
