7-43 (LO. 7) Xinran, who is married and files a joint return, owns a grocery store. In 2022, his gross sales were $276,000 and his operating expenses were $320,000. Other items on his 2022 return were as follows: Nonbusiness capital gains (short-term) Nonbusiness capital losses (long-term) Itemized deductions Ordinary nonbusiness income Salary from part-time job (spouse) In 2023, Xinran provides the following information: $20,000 9,000 18,000 8,000 10,000 Net business income Salary (spouse) Interest income Adjusted gross income 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)] Total itemized deductions $60,000 25,000 2,000 $87,000 400 $35,400 The 2022 married filing jointly standard deduction is $25,900; Xinran's itemized deductions will exceed the 2023 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 "0". Problem 7-43 (LO. 7) Xinran, who is married and files a joint return, owns a grocery store. In 2022, his gross sales were $276,000 and his operating expenses were $320,000. Other items on his 2022 return were as follows: Nonbusiness capital gains (short-term) Nonbusiness capital losses (long-term) Itemized deductions Ordinary nonbusiness income Salary from part-time job (spouse) In 2023, Xinran provides the following information: $20,000 9,000 18,000 8,000 10,000 Net business income Salary (spouse) Interest income Adjusted gross income 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)] Total itemized deductions $60,000 25,000 2,000 $87,000 400 $35,400 The 2022 married filing jointly standard deduction is $25,900; Xinran's itemized deductions will exceed the 2023 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 "0". a. Compute Xinran's taxable income (or loss) for 2022? 2022 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 Less: MFJ standard deduction Less: Deduction for qualified business income Taxable loss Feedback -15,000 25,100 X 0 $ -40,100 X 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. b. Compute Xinran's NOL for 2022. 44,000 X c. Determine Xinran's taxable income for 2023. 2023 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary Interest income Adjusted gross income Less: Itemized deductions: Less: Deduction for qualified business income: Grocery store Taxable income 25,000 2,000 87,000 35,400 3,200 48,400 (2) Determine the NOL deduction: 1. The NOL carryforward $ -34,000, or 2. 80% of taxable income computed in step 1: $ (3) Determine final taxable income: Net business income Salary Interest income Less: Deduction for qualified business income: Grocery store Taxable income 3,200 48,400 (2) Determine the NOL deduction: 1. The NOL carryforward $ -34,000, or 2. 80% of taxable income computed in step 1: $ (3) Determine final taxable income: Net business income Salary Interest income NOL deduction Adjusted gross income Less: Itemized deductions Charitable contributions Medical expenses Less: Deduction for qualified business income: Grocery store Taxable income 000 00000