Question

A single women, reports the following taxable income for 2020:

Gross income from Businesses: 200,140

Business Expenses: 240,000

Personal interest income: 1000

dividend income: 2000

Casualty loss from a federally declared disaster: 2000

property taxes on primary residence: 6000

Interest expense on primary residence: 4000

Compute net operating loss for 2020 (show calculations)

Answer 1

Computation of net operating loss

For calculating net operating loss, only the income and expenses related to the business is taken into account.

Business Income= 200,140

Personal Interest income= Not to be taken into account

Dividend Income= 2,000

Total operating Income= 202,140

Business Expenses 240,000

Casualty loss from disaster= Not to be taken into account.

Property tax and Interest Expense on primary residence is not related to business hence not taken into account

Net operating loss= (202140-240000)= -37860