Michelle and Mark are married and file a joint return. Michelle owns an unincorporated dental practice. Mark works part-time as a high school math teacher, and spends the remainder of his time caring for their daughter. During 2016, they report the following items:
Mark’s salary.......................................................................$18,000
Interest earned on savings account.....................................1,200
Interest paid on personal residence....................................7,100
Itemized deductions for state and local taxes....................3,400
Items relating to Michelle’s dental practice
Revenues...............................................................................65,000
Payroll and salary expense.................................................49,000
Supplies.................................................................................17,000
Rent........................................................................................16,400
Advertising...............................................................................4,600
Depreciation............................................................................8,100
a. What is Michelle and Mark’s taxable income or loss for the year?
b. What is Michelle and Mark’s NOL for the year?