Question

Phillis and Trey are married and file a joint tax return. For 2019, they have $4,800 of nonbusiness capital gains, $2,300 of nonbusiness capital losses, $500 of interest income, and no itemized deductions. The standard deduction for married filing jointly is $24,000.Based on these transactions, to arrive at the NOL, Phillis and Trey's taxable income must be adjusted by $____________.

Answer 1

Answer:

Based on these transactions, to arrive at the NOL, Phillis and Trey's taxable income must be adjusted by $21,000.

Explanation:

From the provided data we have;

nonbusiness capital gains = $4,800

nonbusiness capital losses = $2,300

interest income, and no itemized deductions = $500

The standard deduction for married filing jointly = $24,000

To arrive at Net Operating Loss = standard deduction for married - (interest income + (nonbusiness capital gains - nonbusiness capital losses))

NOL = $24,000 - [500 + (4800 -2300)]

= 24000 - (500 + 2500)

= 24000 - 3000

= $21,000

Based on these transactions, to arrive at the NOL, Phillis and Trey's taxable income must be adjusted by $21,000.