American Corporation has two equal shareholders, Mr. Freedom and Brave Inc. In addition to their investments in American stock, both shareholders have made substantial loans to American. During the current year, American paid $200,000 interest each to Mr. Freedom and Brave Inc. Assume that American and Brave have 21 percent tax rates, and Mr. Freedom’s marginal tax rate on ordinary income is 37 percent. Calculate American’s tax savings from deduction of these interest payments and their after-tax cost. Calculate Brave’s tax cost and after-tax earnings from its receipt of interest income from American. Calculate Mr. Freedom’s tax cost and after-tax earnings from his receipt of interest income from American. Recalculate Brave’s tax cost and after-tax earnings assuming its receipt of interest from American is treated as a constructive dividend. Recalculate Mr. Freedom’s tax cost and after-tax earnings assuming his receipt of interest from American is treated as a constructive dividend.

Alandlord rented an art studio to an artist. under the terms of the signed, written, two-year lease, the artist agreed to pay the landlord $1,000 per month and to assume responsibility for all necessary repairs. after the first year of the lease, the artist assigned the balance of his lease to a sculptor. the landlord approved the sculptor as a tenant and accepted two rent payments from her, and then the landlord sold the building to an investor. the sculptor had made two payments to the investor when an electrical fire broke out in the studio, injuring the sculptor. the fire was caused by faulty wiring. the landlord was aware that there was a dangerous wiring problem when he leased the property to the artist. but when the landlord discovered how costly repairs would be, he decided it would be more profitable to sell the property than to repair it. the problem was not easily discoverable by anyone other than an expert electrician, and the landlord did not tell the artist, the sculptor, or the investor about the problem. the sculptor sues to recover damages for her injuries. from whom can the sculptor recover?