Cactus Company Is a Calendar Year S Corporation with the Following

Cactus Company is a calendar year S corporation with the following current year information:
Operating loss $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ $ (120,000 )
Liabilities:
Notes payable, City Bank $\quad$$\quad$$\quad$ 20,000
Notes payable, Jake Crow $\quad$$\quad$$\quad$ 20,000
On January 1, John James bought 50% of Cactus Company stock for $30,000. How much of the operating loss may John deduct on his Form 1040? Assume the excess business loss limitation does not apply.

A) $60,000
B) $30,000
C) $40,000
D) $50,000