Boston Company, an Electing S Corporation, Has an Operating Loss

Multiple Choice

Boston Company, an electing S corporation, has an operating loss of $400,000 for the current year. Hank owns a 40% interest in the company and is a material participant. At the beginning of the year, Hank's adjusted basis in the stock is $30,000. During the year the company borrows $100,000 with a recourse note. How much of the loss can Hank deduct on his current-year income tax return?

A) $- 0 -
B) $ 30,000
C) $ 70,000
D) $160,000
E) $200,000