Maurice purchases a bakery from Philip for $410,000. He spends an additional $150,000 (financed with a nonrecourse loan) updating the bakery equipment. During the first year of operations as a sole proprietorship, the bakery incurs a loss of $125,000. Maurice has $300,000 of salary income as the chief financial officer of a publicly-traded corporation. He has interest income of $30,000 and dividend income of $50,000.
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