Problem 7-45 (LO. 7)

Xinran, who is married and files a joint return, owns a grocery store. In 2018, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2018 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 2019, Xinran provides the following information:

Net business income				$60,000
Salary (spouse)				25,000
Interest income				2,000
Adjusted gross income				$87,000
Less: Itemized deductions*
	Charitable contributions (cash) of $35,000, limited to 60% of AGI	$35,000
	Medical expenses of $9,100, limited to the amount in excess of 10% of AGI ($9,100 $8,700)	400
	Total itemized deductions			$35,400

* The 2018 married filing jointly standard deduction is $24,000; Xinran's itemized deductions will exceed the 2019 standard deduction (after adjustment for inflation). The medical expense AGI floor is scheduled to increase to 10% in 2019.

Enter all amounts as positive numbers. However, use the minus sign to indicate a loss.

a. Compute Xinran's taxable income or loss for 2018.

If an amount is zero, enter "0". If required, use the minus sign to indicate a loss.

2018
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: Standard deduction	$24,000
Less: Deduction for qualified business income	$________
Loss	$________

Xinran's NOL for 2018 is $.________

b. Determine Xinran's taxable income for 2019.

2019
(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			$18,000
	Less: Deduction for qualified business income:			$_____
	Grocery store
	Taxable income			$______

(2)	Determine the NOL deduction:
	1. The NOL carryforward $_________, 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
	NOL deduction			$______
	Adjusted gross income			$______
	Less: Itemized deductions
	Charitable contributions	$______
	Medical expenses	$______
	Less: Deduction for qualified business income:
	Grocery store			$______
	Taxable income			$______

Can you help me figure this out?