$ * -39,800 Feedback Check My Work Incorrect c. . c. Determine Xinran's taxable income for 2022. 2022 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary 25,000 Interest income 2,000 Adjusted gross income 87,000 Less: Itemized deductions: 35,400 Less: Deduction for qualified business income: Grocery store Taxable income $ * 54,000 (2) Determine the NOL deduction: 1. The NOL carryforward $ * 41,280 , or 2. 80% of taxable income computed in step 1: $ 41,280 X (3) Determine final taxable income: $ Net business income 60,000 Salary 25,000 Interest income 2,000 X NOL deduction 87,000 $ X 35,400 Adjusted gross income Less: Itemized deductions Charitable contributions $ * 35,000 x X Medical expenses 400 -35,400 Less: Deduction for qualified business income: $ X Grocery store 51,600 $ Taxable income 51,600 Problem 7-44 (LO. 7) Xinran, who married and files a joint return, owns a grocery store. In 2021, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2021 return were as follows: Nonbusiness capital gains (short-term) $20,000 Nonbusiness capital losses (long-term) 9,000 Itemized deductions 18,000 Ordinary nonbusiness income 8,000 Salary from part-time job 10,000 In 2022, Xinran provides the following information: Net business income Salary (spouse) Interest income Adjusted gross income $60,000 $ 25,000 2,000 $87,000 Less: Itemized deductions* Charitable contributions (cash) $35,000 Medical expenses of $6,925 [limited to the amount in excess of 7.5% of AGI ($6,925 - $6,525)] 400 Total itemized deductions $35,400 * The 2021 married filing jointly standard deduction is $25,100; Xinran's itemized deductions will exceed the 2022 standard deduction (after adjustment for inflation). Enter all amounts as positive numbers. However, use the minus sign to indicate a loss. If an amount is zero, enter "O". a. Compute Xinran's taxable income (or loss) for 2021? 2021 $ Net business income/loss from grocery store -44,000 Salary 10,000 Ordinary nonbusiness income 8,000 Net short-term capital gain 11,000 Adjusted gross income/loss -15,000 Less: MF) standard deduction 25,100 Less: Deduction for qualified business income 0 Loss -40,100 Feedback Check My Work The NOL provision is intended as a form of relief for business income and losses. Thus, only losses from the operation of a trade or business (or profession), casualty and theft losses, or losses from the confiscation of a business by a foreign government can create an NOL. $ * -39,800 Feedback Check My Work Incorrect c. . c. Determine Xinran's taxable income for 2022. 2022 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary 25,000 Interest income 2,000 Adjusted gross income 87,000 Less: Itemized deductions: 35,400 Less: Deduction for qualified business income: Grocery store Taxable income $ * 54,000 (2) Determine the NOL deduction: 1. The NOL carryforward $ * 41,280 , or 2. 80% of taxable income computed in step 1: $ 41,280 X (3) Determine final taxable income: $ Net business income 60,000 Salary 25,000 Interest income 2,000 X NOL deduction 87,000 $ X 35,400 Adjusted gross income Less: Itemized deductions Charitable contributions $ * 35,000 x X Medical expenses 400 -35,400 Less: Deduction for qualified business income: $ X Grocery store 51,600 $ Taxable income 51,600 Problem 7-44 (LO. 7) Xinran, who married and files a joint return, owns a grocery store. In 2021, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2021 return were as follows: Nonbusiness capital gains (short-term) $20,000 Nonbusiness capital losses (long-term) 9,000 Itemized deductions 18,000 Ordinary nonbusiness income 8,000 Salary from part-time job 10,000 In 2022, Xinran provides the following information: Net business income Salary (spouse) Interest income Adjusted gross income $60,000 $ 25,000 2,000 $87,000 Less: Itemized deductions* Charitable contributions (cash) $35,000 Medical expenses of $6,925 [limited to the amount in excess of 7.5% of AGI ($6,925 - $6,525)] 400 Total itemized deductions $35,400 * The 2021 married filing jointly standard deduction is $25,100; Xinran's itemized deductions will exceed the 2022 standard deduction (after adjustment for inflation). Enter all amounts as positive numbers. However, use the minus sign to indicate a loss. If an amount is zero, enter "O". a. Compute Xinran's taxable income (or loss) for 2021? 2021 $ Net business income/loss from grocery store -44,000 Salary 10,000 Ordinary nonbusiness income 8,000 Net short-term capital gain 11,000 Adjusted gross income/loss -15,000 Less: MF) standard deduction 25,100 Less: Deduction for qualified business income 0 Loss -40,100 Feedback Check My Work The NOL provision is intended as a form of relief for business income and losses. Thus, only losses from the operation of a trade or business (or profession), casualty and theft losses, or losses from the confiscation of a business by a foreign government can create an NOL