Problem 7-44 (LO. 7) Xinran, who is married and files a joint retum, 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) 520,000 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 jaintly 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 (ar loss) for 2021? 2021 $ Net business income/loss from grocery store -44,000 Salary 10,000 Ordinary nonbusiness income Net short-term capital gain 8,000 11,000 Adjusted gross income/loss -15,000 Less: MF) standard deduction 25,100 Less: Deduction for qualified business income 0 $ Loss -40,100 reback 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 2021. $ X Freck Check My WORK Incorrect 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 Adjusted gross income 2,000 5 87,000 Less: Itemized deductions: 35,400 Less: Deduction for qualified business income: Grocery store Taxable income $ X (2) Determine the NOL deduction: 1. The NOL carryforwards , or 2. 80% of taxable income computed in step 1: $ ( (3) Determine final taxable income: Net business income 60,000 Salary 25,000 Interest income 2,000 S S NOL deduction Adjusted gross income Less: Itemized deductions Charitable contributions Medical expenses Less: Deduction for qualified business income: Grocery store Taxable income S S Farch Check OK Partially correct esteck