Scenario 3--Thanks to a pandemic nobody saw coming nor was prepared for, JT23 and one of his businesses, Company A, had a very challenging 2020. So much so that JT23 needs your help in determining his 2020 Federal tax liability. Here are some facts to assist you. Company A had a taxable business loss of $5 million. Company B had taxable income of $2 million. JT23paid himself wages of $1 million from Company A and collected royalty income on his NCAAlikeness license payments of $100,000. JT23 is active in both business for 2020.

1.Compute JT23s Adjusted Gross Income (AGI) assuming he is married filing a joint tax return. Ignore any concern surrounding 163j limitations and ignore 199A for this exercise.Ignore any CARES ACT tax law changes, however, comment on any changes CARES ACT enacted thats relevant to the question.

2.JT23 lives in Texas, has no state income tax, pays $15k in real estate taxes and has no home mortgage interest expense. He is charitably motivated and has contributed $13k cash to UW Foundation in 2020. He paid $20k to a third party to manage his money during 2020. He paid Al the Estate Planner $5k for an estate plan. Compute JT23s taxable income for 2020. Ignoring CARES ACT law changes, use AGI from #1 above as your starting point.

3.Ignoring CARES ACT taxlaw changes, what is JT23s Net Operating Loss carryforward to 2021? How much of the NOL can offset taxable income in 2021? How many years can he carry this loss forward? Is he permitted to carry the loss back to 2019 and obtain a refund?How would the CARES ACT law changes revise your answer?