Dumbledore Corporation was formed on January 1, 2021. Ms. Sparks owns 25% of the corporation's stock. The corporation made an S election immediately, and it is a calendar-year corporation. Ms. Sparks had contributed $16,000 cash to Dumbledore in exchange for her stock. On August 8, 2021, Dumbledore Corporation borrowed $22,000 from Mr. Smith, and $20,000 from First National Bank under a recourse financing arrangement. Dumbledore had losses from its operations of $104,000 in 2021 and $80,000 in 2022. At the end of 2022, Dumbledore Corporation had not repaid any of the loans from Mr. Smith or the bank. What part of Dumbledore Corporation's 2022 loss may Mr. Smith report on his 2022 individual tax return?