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Xinran, who is married and files a joint return, owns a grocery store. In 2020, his gross sales were $276,000, and his operating expenses were

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Xinran, who is married and files a joint return, owns a grocery store. In 2020, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2020 retum were as follows: Nonbusiness capital gains (short-term) $20,000 Nonbusiness capital losses (long-term) 9,000 Itemized deductions 18,000 Ordinary nonbusiness Income Salary from part-time job 8,000 10,000 $60,000 In 2021, Xinran provides the following information: Net business income Salary (spouse) Interest income Adjusted gross income 25,000 2,000 $87,000 $35,000 Less: Itemized deductions Charitable contributions (cash) of $35,000, (limited to 60% of AGI) Medical expenses of $9,100, [limited to the amount in excess of 10% of AGI ($9,100 - $8,700)] Total Itemized deductions 400 $35,400 - The 2020 married filing Jointly standard deduction is $24.800; Xinran's itemized deductions will exceed the 2021 standard deduction (after adjustment for Inflation), Assume that the medical expense AGI floor Is 10% in 2021 (it was 7.5% for 2017 through 2020). 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 (or loss) for 2020? 2020 $ Net business income/loss from grocery store 44,000 10,000 Salary Ordinary nonbusiness income 8,000 Net short term capital gain 11,000 $ Adjusted gross income/loss -15,000 24.800 Less: MF) standard deduction Less: Deduction for qualified business Income 0 Loss -39,800 b. Compute Xinran's NOL for 2020. c. Determine Xinran's taxable income for 2021. 2021 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary 25,000 Interest income 2,000 87,000 / Adjusted gross income Less: Itemized deductions: Less: Deduction for qualified business Income: Grocery store 35,400 II 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

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