Xinran, who is married and files a joint return, owns a grocery store. In 2021, his...

Transcribed Image Text:

Xinran, who is married and files a joint return, owns a grocery store. In 2021, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2021 return were as follows: Nonbusiness capital gains (short-term) $20,000 Nonbusiness capital losses (long-term) 9,000 Itemized deductions 18,000 Ordinary nonbusiness income 8,000 Salary from part-time job 10,000 In 2022, Xinran provides the following information: Net business income $60,000 Salary (spouse) 25,000 Interest income 2,000 Adjusted gross income $87,000 Less: Itemized deductions* Charitable contributions (cash) $35,000 Medical expenses of $6,925 [limited to the amount in excess of 7.5% of AGI ($6,925 - $6,525)] 400 Total itemized deductions $35,400 * The 2021 married filing jointly standard deduction is $25,100; Xinran's itemized deductions will exceed the 2022 standard deduction (after adjustment for inflation). a. Compute Xinran's taxable income (or loss) for 2021? 2021 Net business income/loss from grocery store -44,000 Salary 10,000 Ordinary nonbusiness income 8,000 Net short-term capital gain 11,000 $ Adjusted gross income/loss -15,000 Less: MFJ standard deduction 25,100 Less: Deduction for qualified business income Loss Feedback Check My Work b. Compute Xinran's NOL for 2021. %24 c. Determine Xinran's taxable income for 2022. 2022 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary 25,000 Interest income 2,000 Adjusted gross income Less: Itemized deductions: Less: Deduction for qualified business income: Grocery store Taxable income (2) Determine the NOL deduction: 1. The NOL carryforward s or 2. B0% of taxable income computed in step 1: $ (3) Determine final taxable income: Net business income Salary Interest income NOL deduction Adjusted gross income Less: Itemized deductions Charitable contributions Medical expenses Less: Deduction for qualified business income: Grocery store Taxable income Xinran, who is married and files a joint return, owns a grocery store. In 2021, his gross sales were $276,000, and his operating expenses were $320,000. Other items on his 2021 return were as follows: Nonbusiness capital gains (short-term) $20,000 Nonbusiness capital losses (long-term) 9,000 Itemized deductions 18,000 Ordinary nonbusiness income 8,000 Salary from part-time job 10,000 In 2022, Xinran provides the following information: Net business income $60,000 Salary (spouse) 25,000 Interest income 2,000 Adjusted gross income $87,000 Less: Itemized deductions* Charitable contributions (cash) $35,000 Medical expenses of $6,925 [limited to the amount in excess of 7.5% of AGI ($6,925 - $6,525)] 400 Total itemized deductions $35,400 * The 2021 married filing jointly standard deduction is $25,100; Xinran's itemized deductions will exceed the 2022 standard deduction (after adjustment for inflation). a. Compute Xinran's taxable income (or loss) for 2021? 2021 Net business income/loss from grocery store -44,000 Salary 10,000 Ordinary nonbusiness income 8,000 Net short-term capital gain 11,000 $ Adjusted gross income/loss -15,000 Less: MFJ standard deduction 25,100 Less: Deduction for qualified business income Loss Feedback Check My Work b. Compute Xinran's NOL for 2021. %24 c. Determine Xinran's taxable income for 2022. 2022 (1) Determine taxable income before application of the NOL: Net business income 60,000 Salary 25,000 Interest income 2,000 Adjusted gross income Less: Itemized deductions: Less: Deduction for qualified business income: Grocery store Taxable income (2) Determine the NOL deduction: 1. The NOL carryforward s or 2. B0% of taxable income computed in step 1: $ (3) Determine final taxable income: Net business income Salary Interest income NOL deduction Adjusted gross income Less: Itemized deductions Charitable contributions Medical expenses Less: Deduction for qualified business income: Grocery store Taxable income

Answer rating: 100% (QA)

a The Loss of Xinran for the year 2021 is 600000 b The Xinran NOL for 2021 is 4400000 c 1 The Tax... View the full answer