On 12/31/X4, Zoom,LLC, reported a $58,500 loss on its books. The items included in the loss computation were $29,000 in sales revenue, $14,000 in qualified dividends, $21,000 in cost of goods sold, $49,000 in charitable contributions, $19,000 in employee wages, and $12,500 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return?
A) ($8,000)
B) ($23,500)
C) ($58,500)
D) ($93,500)

Question

Quizplus · Accepted Answer

To calculate ordinary business income (loss), we need to subtract qualified dividends and charitable contributions from the net income (loss) calculated using all the items mentioned in the problem.

Net income = Sales revenue - Cost of goods sold - Employee wages - Rent expense - Loss 
Net income = $29,000 - $21,000 - $19,000 - $12,500 - $58,500 
Net income = ($82,000)

Ordinary business income (loss) = Net income - Qualified dividends - Charitable contributions 
Ordinary business income (loss) = ($82,000) - $14,000 - $49,000 
Ordinary business income (loss) = ($23,500)

Therefore, the best choice is B, ($23,500).

On 12/31/X4, Zoom,LLC, Reported a $58,500 Loss on Its Books