During 2017, Rick and his wife, Sara, had the following items of income and expense to report:
Gross receipts from business .................................................    $400,000
Business expenses ...................................................................      525,000
Interest income from bank savings accounts ......................           8,000
Sara’s salary ..............................................................................        50,000
Long-term capital gain on stock held as an investment ......         4,000
Itemized deductions (no casualty or theft) ............................      15,000
a. Assuming that Rick and Sara file a joint return, what is their taxable income for 2017?
b. What is the amount of Rick and Sara’s NOL for 2017?
c. To what years can Rick and Sara’s NOL be carried?
d. Based on your computations, identify the components of their NOL. What is the rationale for excluding the items that do not affect the NOL computation?