Jennifer Nash is a plumber in Waterloo, Ontario, who spends all of her weekends and holi- days operating a farm she purchased this year.She is confident that within two years her farm will be making a profit.In the current year, the farm had a loss of $18,000.
i.In the current year, she can deduct a maximum of $2,500 of the farm loss against other income.
ii.Any loss that is not deductible in the current year can be carried forward for a maxi- mum of seven years.
iii.Any loss that is not deductible in the current year can only be applied to the extent of farm income in the carry over year.

Question

Quizplus · Accepted Answer

The Answer is i.False.In the current year, she can deduct a maximum of $8,750 [$2,500 + (1/2)($12,500)] of the farm loss against other income.
ii.False.Any loss that is not deductible in the current year can be carried forward for a maximum of 20 years.
iii.True.A restricted farm loss can only be used to the extent of farm income in the carry over period.

Jennifer Nash Is a Plumber in Waterloo, Ontario, Who Spends