Question

margaret is self employed geologist who had net profit of 82200. her husband sean started own business in august and had a deductible loss of 3,800. both busineeses are sole proprietorships. They were domiciled in Wisconsin and lived together during all of the year but will FILE SEPARATE RETURNS. WHAT AMOUNT OF SELF EMPLOYMENT INCOME IS REPORTED ON LINE 12 OF SEAN;S SEPARATE FORM 1040.

3800

63201

39200

41100

Answer 1

In the question, it is mentioned that Margaret is a geologist. So she is not dependant on her husband and her husband Sean has no role in her self employment. Also, they are not filing joint return. In question it is mentioned that they are filing seperate returns. Hence as per IRS, their income cannot be clubbed. So, Margaret cannot enjoy set-off of loss of her husband Sean.

So, the income to be reported in separate return form 1040, line 12 of SEAN is loss of $ 3800.

So, the option A , $ 3800 is correct. It is loss.

Hope it helps,

Thank you.