During 2021, John Colburn, a single individual, reports the following taxable income:

Gross income from business $200,150

Less: Business expenses 240,000 ($39,850)

Plus: Interest income 1,000

Dividend income 2,000

AGI ($36,850)

Less: Greater of itemized deductions or standard deduction

Casualty loss from a federally declared disaster area $2,000

Taxes 6,000

Interest expense 6,000

Total itemized deductions $14,000

or

Standard deduction $12,400 $ 14,000

Taxable income ($50,850)

Compute John Colburn's net operating loss for 2021.

1. $41,850

2. $50,850

3. $40,850

4. $51,850