LO.6, 7 Orange, Inc., a calendar year corporation in Clemson, South Carolina, elects S corporation status for 2018. The company generated a $74,000 NOL in 2017 and another NOL of $43,000 in 2018. Orange stock always is owned by the same four shareholders, each owning 25% of the stock. Pete, one of the shareholders, holds a $6,020 basis in this Orange stock at the beginning of 2018. Identify the Federal income tax issues that Pete faces.