Your newest client, Smiles PC, is a dental practice providing comprehensive dental services in the Houston area. The corporation is solely owned by Mark W. Nguyen, DDS, and has been set up as an S corporation since its inception five years ago. Nguyen is the only dentist in the practice and works full-time. He also has two full-time dental hygienists, one office manager and one administrative assistant in the office. At the beginning of the current year, Nguyen’s stock basis in Smiles PC totaled $30,000. The corporation had $100,000 in outstanding debt at year-end, the result of purchasing expensive dental equipment. The debt is under the name of the corporation but is personally guaranteed by Nguyen. During the current year, Smiles PC sustained a net ordinary loss of $50,000. Nguyen is an employee of the corporation and was paid a salary of $120,000 for the year; he also took a cash distribution $10,000. Dr. Nguyen has called your office today and would like to know how much of the loss he will be able to deduct on his personal return. He is envisioning a sizable refund as a result of the loss deduction. 

Will he be able to take any loss deduction for the year?