Question

44. Santiago reported the following amounts in his 2018 tax return:

Interest income	$   6,000
Loss from sole proprietorship	(20,000)
AGI	(14,000)
Standard deduction	(12,000)
	($26,000)

Santiago has generated an NOL of

A) $0.

B) ($26,000).

C) ($14,000).

D) ($20,000).

45. A taxpayer incurs a net operating loss in the current year. With respect to the application of the NOL,

A) the taxpayer will carry back the NOL three years first, then carry forward any balance for five years.

B) the taxpayer must carry forward the loss and has up to 20 years to use it.

C) the taxpayer can carry forward the loss indefinitely until there is sufficient taxable income to use it up.

D) the taxpayer will first carry back the NOL for two years, then carry forward the balance for a period of 20 years, or the taxpayer can elect to only carry forward the loss for the 20-year allowable period.

46. Jakub incurred a $40,000 net operating loss in 2018. In 2019, he earned $35,000 of taxable income. Jakub will be able to take an NOL deduction in 2019 of

A) $35,000.

B) $40,000.

C) $28,000.

D) $26,250.

Answer 1

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