QUESTION 43:

Mauricios small corporation suffered a $10,000 Net Operating Loss (NOL) in the 2019 tax year. In 2020, due to the governments COVID-19 incentives, he could continue with his business and produced a net profit of $25,000 at the end of the 2020 tax year. In an effort to reduce his taxes in 2020, how much of his total current NOL in 2019 will Mauricio carryforward to the 2020 tax year?

a) He will carryforward the entire $10,000 NOL. b) He must carryforward 50% of the NOL unless he elects to waive the carryback. c) He may elect to carryforward whatever amount of the NOL suitable for his business. d) He must carryforward zero of the NOL to the 2020 year.

Question 54:

Melissa owns an apartment building in San Francisco, California. In addition to providing the utilities for her tenants, she also receives income for cleaning the halls and utility rooms and picking up the trash.The apartment building is her only rental property. Which of the following statements is true regarding Melissas income?

a) Melissa reports her income and expenses on Schedule C, Form 1040. b) Melissa reports her income on Schedule C or Schedule C-EZ, but its not subject to Self-Employment Tax. c) Melissa may combine the income from both activities and report it on Schedule E. d) Melissa is considered a Real Estate Professional and is subject to particular tax rules.