Question

Julie, a single taxpayer, has completed her 2018 Schedule C and her net loss is $40,000. Her only other income is wages of $30,000. Julie takes the standard deduction of $12,000 in 2018.
a. Calculate Julie's taxable income or loss
b. Calculate the business and nonbusiness portions of her taxable income or loss.
Business: $______ (loss)
Nonbusiness: $_____(loss)
c. Determine Julie's 2018 NOL.
$_____

Answer 1

Answer: See Explanation

Explanation:

a. Calculate Julie's taxable income or loss

This will be calculated as:

Wages - Business loss - Standard deduction

= $30000 - $400000 - $12000

= -$22000

There's a taxable loss of $22000

b. Calculate the business and nonbusiness portions of her taxable income or loss

The business loss will be the difference between the wages and the net loss which will be:

= $30000 - $40000

= -$10000

The non business loss is $12000 which is the standard deduction.

c. Determine Julie's 2018 NOL

The net business loss is $10000