On January 1, X9, Gerald received his 50% profits and capital interest in High Air, LLC in exchange for $3,700 in cash and real property with a $4,700 tax basis secured by a $3,700 nonrecourse mortgage. High Air reported a $16,700 loss for its X9 calendar year. How much loss can Gerald deduct, and how much loss must he suspend if he only applies the tax basis loss limitation?

Multiple Choice

• $0, $16,700.

• $0, $8,350.

• $6,550, $0.

• $0, $6,550.

• None of the choices are correct.