Jack, age 30 and married with no dependents, is a self-employed individual.For 2019, his self-employed business sustained a net loss from operations of $10,000 from operations .The following additional information was obtained from his personal records for the year: $$\begin{array} { l r }
\text { Nonbusiness long-term capital gain } & \$ 2,000 \
\text { Interest income } & 6,000 \
\text { Itemized deductions-consisting of taxes and interest } & ( 26,000 )
\end{array}$$ Based on this information, what is Jack's net operating loss for 2019 if he and his spouse file a joint return?
A)($2,000)
B)($8,000)
C)($10,000)
D)($25,000)
E)($28,000)

Question

Jack, age 30 and married with no dependents, is a self-employed individual.For 2019, his self-employed business sustained a net loss from operations of $10,000 from operations .The following additional information was obtained from his personal records for the year: $$\begin{array} { l r } 
\text { Nonbusiness long-term capital gain } & \$ 2,000 \
\text { Interest income } & 6,000 \
\text { Itemized deductions-consisting of taxes and interest } & ( 26,000 )
\end{array}$$ Based on this information, what is Jack's net operating loss for 2019 if he and his spouse file a joint return?
A)($2,000)
B)($8,000)
C)($10,000)
D)($25,000)
E)($28,000)

Quizplus · Accepted Answer

Since Jack's net loss from his self-employed business is greater than his other income, he has a net operating loss (NOL) for the year. However, since he is married and filing a joint return with his spouse, the NOL cannot be carried back to prior years; instead, it can only be carried forward to future years. Therefore, the NOL for 2019 is simply the amount of the net loss from the business operations, which is $10,000. Thus, the correct answer is choice C.

Jack, Age 30 and Married with No Dependents, Is a Self-Employed