Oliver and James are equal owners of OJ Company. During the current year, when OJ Company is insolvent by $100,000, a creditor reduces one of OJ's debts by $50,000. For the year, OJ incurs a $20,000 operating loss. Oliver and James are both solvent. Oliver's basis in OJ is $30,000; James's basis is $40,000. Determine the effect of OJ's debt discharge and net operating loss on Oliver and James assuming that
a. OJ is organized as a partnership.
b. OJ is organized as an S corporation.