Steve and Holly report the following items for 2019: $$\begin{array} { l r }
\text { Dividend income } & \$ 16,000 \
\text { Interest income } & 14,000 \
\text { Itemized deductions (none of the amount resulted from a casualty loss) } & ( 26,000 ) \
\text { Business capital gains } & 2,000 \
\text { Business capital losses } & ( 10,000 )
\end{array}$$ In calculating their net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?
A)$0
B)$2,000
C)$4,000
D)$6,000
E)None of these.

Question

Steve and Holly report the following items for 2019: $$\begin{array} { l r } 
\text { Dividend income } & \$ 16,000 \
\text { Interest income } & 14,000 \
\text { Itemized deductions (none of the amount resulted from a casualty loss) } & ( 26,000 ) \
\text { Business capital gains } & 2,000 \
\text { Business capital losses } & ( 10,000 )
\end{array}$$ In calculating their net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss)?
A)$0
B)$2,000
C)$4,000
D)$6,000
E)None of these.

Quizplus · Accepted Answer

Only the insurance proceeds of $4,000 must be added back to taxable income because it represents a non-taxable source of income that should not be included in the net operating loss calculation. The other items of income or loss are taxable and should be included in the calculation. Therefore, the answer is C.

Steve and Holly Report the Following Items for 2019 In Calculating Their Net Operating Loss, and with Respect to