During 2016, Rick and his wife, Sara, had the following items of income and expense to report:
Question:
During 2016, Rick and his wife, Sara, had the following items of income and expense to report:
Gross receipts from farming business............................................................$400,000
Farming expenses.....................................................................................525,000
Interest income from bank savings accounts.........................................................8,000
Sara's salary.............................................................................................50,000
Long-term capital gain on stock held as an investment.............................................4,000
Itemized deductions (no casualty or theft) .........................................................15,000
a. Assuming that Rick and Sara file a joint return, what is their taxable income for 2016?
b. What is the amount of Rick and Sara's farming loss for 2016?
c. What is the amount of Rick and Sara's NOL for 2016?
d. To what years can Rick and Sara's NOL be carried?
e. Based on your computations, identify the components of their NOL. What is the rationale for excluding the items that do not affect the NOL computation?
Step by Step Answer:
a Business receipts from farming 400000 Less Business expenses for farming 525000 Net business loss ...View the full answer
South Western Federal Taxation Individual Income Taxes 2017
ISBN: 9781305873988
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young, Nellen
