LO.7 Gus, who is married and files a joint return, owns a grocery store. In 2012, his
Question:
LO.7 Gus, who is married and files a joint return, owns a grocery store. In 2012, his gross sales were $276,000, and operating expenses were $320,000. Other items on his 2012 return were as follows:
Nonbusiness capital gains (short term) $20,000 Nonbusiness capital losses (long term) 9,000 Itemized deductions (no casualty or theft) 18,000 Ordinary nonbusiness income 8,000 Salary from part-time job 10,000 During 2010, Gus had no taxable income. In 2011, Gus had taxable income of $21,700 computed as follows:
Net business income $ 60,000 Interest income 2,000 Adjusted gross income $ 62,000 Less: Itemized deductions Charitable contributions of $40,000, limited to 50% of AGI $31,000 Medical expenses of $6,550, limited to the amount in excess of 7.5% of AGI ($6,550 − $4,650) 1,900 Total itemized deductions (32,900)
Exemptions (2 × $3,700) (7,400)
Taxable income $ 21,700
a. What is Gus’s 2012 NOL?
b. Determine Gus’s recomputed taxable income for 2011.
c. Determine the amount of Gus’s 2012 NOL to be carried forward to 2013.
Step by Step Answer:
South Western Federal Taxation 2013 Individual Income Taxes
ISBN: 9781133189558
36th Edition
Authors: William Hoffman, James E. Smith