Brooke, Inc., an S corporation, was organized on January 2, 2014, with two equal stockholders who materially participate in the S corporation's business. Each stockholder invested $5,000 in Brooke's capital stock, and each loaned $15,000 to the corporation. Brooke then borrowed $60,000 from a bank for working capital. Brooke sustained an operating loss of $90,000 for the year ended December 31, 2014. How much of this loss can each stockholder claim on his 2014 income tax return?
a. $5,000
b. $20,000
c. $45,000
d. $50,000
Answer: B
Tax
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