Choice "C" is correct. The deduction of the ordinary loss is limited to Junior's basis and any at risk amounts. Junior's basis is calculated as $40,000 + $12,500 capital gain - $5,000 charitable contributions=$47,500; thus the ordinary loss deducted on his return would be limited to $47,500.Choices "a" and "d" are incorrect. Both of these options incorrectly state the ordinary loss. Choice "a" did not take into account the limitation to basis and choice "d" did not take into account the adjustment of basis by the other income/deduction items for the year.Choice "b" is incorrect. The loss, capital gain, and charitable contributions are all stated separately - income from operations is passed through as a net number to the partners and charitable contributions and capital gain are separately stated items, not netted in that figure.