If instead Anne had a basis in the building of $100,000 and sold it for $60,000 its FMV. Assume the building was used in her business.

Anne claims the loss of $40,000 as an ordinary loss and the corp's basis in the building is $60,000.

Anne cannot deduct the loss and the corporation's basis is its purchase of $60,000.

Anne cannot deduct the loss and the corporation's basis is stepped upby the disallowed loss tof $40,000 o $100,000.

If the corporation later sells the building at a gain of $40,000, Anne will then be allowed to deduct the $40,000 loss that was previously disallowed.