Brooke Inc. an S corporation was organized on January 1 Year N with two equal stockholders who materially participate in the
business. Each stockholder invested $5,000 in 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 Year N. How
much of this loss can each stockholder claim on his Year N income tax return?
A
$5,000.
B
$20,000.
C
$45,000.
D
$50,000.