Regula, Leonel, and Aggripina each own 100 shares of Cudgel, Inc., an S corporation that was a C corporation several years ago. While Regula and Leonel actively participate in running the company, Aggripina has a separate day job and is a passive owner. Consider the following information for 2022:

Part 1

As of January 1, 2022, Regula, Leonel, and Aggripina each has a basis in Cudgel stock of $10,000 and a debt basis of $5,000. These loans are shareholder loans and cash was actually advanced to the corporation. On January 1, the stock basis is also the at-risk amount for each shareholder.

Leonel and Aggripina also are passive owners in Pangloss LLC, which allocated business income of $10,000 and related passive expenses of $20,000 to each of them in 2022. Neither has any other source of passive income (besides Cudgel, for Aggripina).

On March 31, 2022, Regula lends $7,500 of her own money to Cudgel.

Anticipating the need for basis to deduct a loss, on April 4, 2022, Leonel takes out a $20,000 loan to make a $20,000 capital contribution to Cudgel. Leonel uses his automobile ($70,000 fair market value) as the sole collateral for his loan (nonrecourse).

Cudgel has an accumulated adjustments account balance of $105,000.00 as of January 1, 2022.

Cudgel has C corporation earnings and profits of $45,000 as of January 1, 2022.

Business (loss)

During 2022, Cudgel reports a business loss of ($120,000), computed as follows:

Sales revenue $130,000

Cost of goods sold -130,000

Salary to Regula

Salary to Leonel -120,000

($120,000)

Cudgel also reported $12,000 of tax-exempt interest income.

$2500 of Dividends

$3000 of Taxable interest

$2500 of Investment Expenses ($500 allocable to Tax exempt interest)

? What amount of Cudgels 2022 business loss of $120,000 are Regula, Leonel, and Aggripina allowed to deduct on their individual tax returns? What are each owners stock basis and debt basis (if applicable) and each owners at-risk amount with respect to the investment in Cudgel at the end of 2022?