Robert and Susan Reid had an NOL of $30,000 in 2017. They had $14,250 oftaxable income for 2015 computed as follows:

Write a letter to Robert and Susan informing them of the amount of the remaining NOLto be carried forward if the loss is applied against the 2015 taxable income. Also prepare a memo for the tax files. Their address is 201 Jerdone Avenue, Conway, SC 29526.

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Salary Capital loss Adjusted gross income Less: Itemized deductions Charitable contributions of $24,000, limited to 50% of AGI Medical expenses of $5,350, limited to the amount in excess of 10% of AGI ($5,350 – $4,600) Total itemized deductions Exemptions (2 x $4,000) Taxable income $ 50,000 (4,000) $ 46,000 $23,000 750 (23,750) (8,000) $ 14,250