Annabell and Eva own and manage Purity Forms Development. Annabell’s and Eva’s bases in Purity at the beginning of the year are $18,000 and $24,000, respectively. During the current year, Purity suffers a $90,000 net operating loss. Purity’s only debt is a $45,000 nonrecourse debt on its office building (incurred during the current year). Determine the deductibility of the net operating loss under each of the following assumptions:

a. Purity is a partnership. Annabell owns a 1/3 interest, and Eva owns a 2/3 interest in the partnership.

b. Purity is a corporation. Annabell owns 1/3 of the stock, and Eva owns 2/3 of the Purity stock.

c. Purity is an S corporation. Annabell owns 1/3 of the stock, and Eva owns 2/3 of the Purity stock.