McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

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{Research} Timo is the sole owner of Jazz Inc., an S corporation. On October 31 2011, Timo executed an unsecured demand promissory note of $15,000, and he transferred the note to Jazz (Jazz could require Timo to pay it $15,000 on demand). When Timo transferred the note to Jazz, his tax basis in his Jazz stock was zero. On January 31, 2012, Timo paid the $15,000 to Jazz as required by the promissory note. For the taxable year ending December 31, 2011, Jazz incurred a business loss of $12,000. How much of the loss clears the stock and debt basis hurdles for deductibility