How much of Craig's losses will be allowed after applying the at$-$risk loss limitation$?$ His losses were not limited by the first loss limitation $($basis$).$ He had the following:

Beginning at$-$risk basis was $$10,000.$

He took out a $$5,000$ recourse loan and used the funds to purchase more S corporation stock. It was an unsecured loan.

His Schedule K$-1($Form $1065)$ had the following amounts:

Box $1.$ Ordinary business loss of $$12,000.$

Box $5.$ Interest income of $$500.$

Box $12.$ Section $179$ deduction of $$400.$

$$0$

$$10,500$

$$12,000$

$$12,400$