Question

Jack, age 30 and married with no dependents, is a self-employed individual. For 2019, his self-employed business sustained a net loss from operations of $10,000 from operations. The following additional information was obtained from his personal records for the year:

Nonbusiness long-term capital gain $ 2,000

Interest income 6,000

Itemized deductions—consisting of taxes and interest (26,000)

Based on this information, what is Jack's net operating loss for 2019 if he and his spouse file a joint return?

a. ($2,000)

b. ($28,000)

c. ($25,000)

d. ($8,000)

e. ($10,000)

Answer 1

(Q) what is Jack's net operating loss for 2019 if he and his spouse file a joint return?

Ans : Option (E) $10000

• Explanation

Operating loss ($10,000)
Non business long-term capital gain 2,000
Interest income 6,000
Adjusted gross income   ($ 2,000)
Less: Itemized deductions (26,000)
Taxable income ($28,000)

Taxable income ($28,000)
Excess of non business deductions over non business income
Itemized deductions $26,000
Non business long-term capital gain (2,000)
Interest income (6,000) =   18000

Therefore , Net operating loss = (28,000) - (18,000) = 10,000