On January 1, X9, Gerald Received His 50 Percent Profits

Multiple Choice

On January 1, X9, Gerald received his 50 percent profits and capital interest in High Air, LLC, in exchange for $3,200 in cash and real property with a $4,200 tax basis secured by a $3,200 nonrecourse mortgage. High Air reported a $16,200 loss for its X9 calendar year. How much loss can Gerald deduct, and how much loss must he suspend if he only applies the tax basis loss limitation?

A) $0, $5,800
B) $0, $8,100
C) $0, $16,200
D) $5,800, $0
E) None of the choices are correct.