Question

Problem 7-43 (LO. 7)

Mario, a single taxpayer with two dependent children, has the following items of income and expense during 2019:

Gross receipts from business $144,000 Business expenses 180,000 Net capital gain 22,000 Interest income 3,000 Itemized deductions (state taxes, residence interest, and contributions) 24,000

a. Determine Mario's taxable income or loss for 2019.

If required, use the minus sign to indicate a negative AGI or a loss.

Adjusted gross income $ Less: itemized deductions Less: Deduction for qualified business income Loss $

c. Determine Mario's NOL for 2019.

Mario's NOL is $.

Answer 1

Mario's Business income

Gross receipts = $144000

less Business Expenses = -180000

Loss from Business = -36000

AGI would be ,

Business Loss = -36000 + 22000 + 3000 = -11000

AGI = - 11000,

Adjusted gross income	-11000
Less: itemized deductions	24000
Less: Deduction for qualified business income	0
Loss	-35000

NOL = business income less business expenses = 144000 - 180000 = 36000 (or -36000)