A shareholder purchased 20 percent of the stock of an S corporation three-quarters of the way through the year for $10,000.

The S corporation incurred a net operating loss of $320,000. What is the amount the shareholder may deduct on his personal income tax return, assuming the at-risk and passive activity rules do not apply?

a. A loss of $64,000

b. A loss of $16,000

c. A loss of $10,000

d. A loss of $2,000

e. None of the above