LO.7 Assume that in addition to the information in Problem 50, Rick and Sara had no taxable income for 2007, 2008, 2009, and 2010 and $4,300 of taxable income for 2011 computed as follows:

Salary $ 25,000 Capital loss (1,000)

Adjusted gross income $ 24,000 Less: Itemized deductions Charitable contributions of $20,000, limited to 50% of AGI $12,000 Medical expenses of $2,100, limited to the amount in excess of 7.5% of AGI ($2,100 − $1,800) 300 Total itemized deductions (12,300)

Exemptions (2 × $3,700) (7,400)

Taxable income $ 4,300

a. Determine Rick and Sara’s recomputed taxable income for 2011.

b. Determine the amount of Rick and Sara’s 2012 NOL to be carried forward to 2013.