Assume the same facts as in Problem 8-56, except instead of a $3,400 itemized deduction for state and local taxes, Michelle and Mark have a $3,400 deductible casualty loss (after limitations).
In problem 8-56
Michelle and Mark are married and file a joint return. Michelle owns an unincorporated dental practice. Mark works part-time as a high school math teacher, and spends the remainder of his time caring for their daughter. During 2015, they report the following items:
Mark’s salary …………………………………………… $18,000
Interest earned on savings account …………………….. 1,200
Interest paid on personal residence …………………….. 7,100
Itemized deductions for state and local taxes …………. 3,400
Items relating to Michelle’s dental practice
Revenues ………………………………………………. 65,000
Payroll and salary expense …………………………….. 49,000
Supplies ……………………………………………….. 17,000
Rent …………………………………………………… 16,400
Advertising …………………………………………… 4,600
Depreciation ………………………………………….. 8,100
a. What is Michelle and Mark’s taxable income or loss for the year?
b. What is Michelle and Mark’s NOL for the year?