Question

Margaret, a married taxpayer filing a joint return, engaged in two business activities this year. Business A earned $470,000 of profit. Business B incurred a loss of $(995,000). How much of Margaret's net business loss is not currently deductible?

Answer 1

Answer:

Margaret is engaged in two business activities.

Business A earned $470,000 of profit. Business B incurred a loss of $(995,000)

If one has two business activities, with loss from one business activity and gain from 2nd business activity, then loss from 1st business activity will reduce gain from 2nd business to the extent of gain.

Hence deductible loss of business B = $470,000

Net Business loss not currently deductible = Total loss - deductible loss

= $995,000 - $470,000

= $525,000