Cactus Company is a calendar year S corporation with the following current year information: Operating loss$(120,000)Liabilities: Notes payable, City Bank 20,000 Notes payable, Jake Crow 20,000 On January 1, John James bought 50% of Cactus Company stock for $30,000. How much of the operating loss may John deduct on his Form 1040? Assume the excess business loss limitation does not apply.
A. $50,000
B. $40,000
C. $30,000
D. $60,000
Answer: C
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