Leonardo invests $10,000 cash in an equipment-leasing activity for a 15% share in the business. The 85% owner is Rebecca, who contributes $10,000 and borrows $75,000 to put in the business. Only Rebecca is liable for repayment of the loan. The partnership incurs a loss of $125,000 during the year. What amount of the loss is deductible currently by Leonardo and Rebecca (ignore passive activity loss rules)?

a. $0 by Leonardo and $0 by Rebecca.

b. $10,000 by Leonardo and $85,000 by Rebecca.

c. $18,750 by Leonardo and $106,250 by Rebecca.

d. $21,250 by Leonardo and $73,750 by Rebecca.