jack is the sole shareholder of avrs Products, Inc., a calendar-year S corporation. jack has asked for your assistance in securing bank financing. avrs has fallen on hard times and will have a large operating loss for 2018. Assume that jack does not have any stock basis. You realize that any lender is going to ask for jack's personal guarantee for any loans made to avrs since jack has substantial personal net worth.jack lacks personal liquidity and because of market conditions jack is resistant to selling assets to obtain the liquidity necessary to increase stock basis. jack will be interested in claiming any avrs losses on her personal tax return.

• jack's options to produce a favorable tax result relative to the proposed loan transaction and recommend a strategy.
• Read Treas.Reg.Section1.1366-2and describe what the IRS position may be regarding the proposed loan transaction relative to jack's loss deduction as well as any other strategies the subject of your advice in1.above
• https://www.law.cornell.edu/cfr/text/26/1.1366-2 link