LO.7 During 2012, 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 2012?

b. What is the amount of Rick and Sara’s farming loss for 2012?

c. What is the amount of Rick and Sara’s NOL for 2012?

d. To what years can Rick and Sara’s NOL be carried?