Of course, outside stock basis is used to determine if any ordinary business loss is deductible.

The gain on the asset sale (480k) was passed through to the shareholder on the K-1.  I am talking about the remaining stock basis bought from the owner personally which has been adjusted each year by income & distributions, etc.  Can the selling shareholder write off the remaining cost of his investment.  Or is his remaining stock basis lost?  That is the point of my question.