Steve and Holly have the following items for the current year: $\begin{array}{lr}
\text { Dividend income } & \$ 8,000 \
\text { Interest income } & 7,000 \
\text { Itemized deductions (none of the amount resulted from a casualty loss) } &(13,000)\
\text { Business capital gains } & 1,000\
\text { Business capital losses } & (5,000)\
\hline
\end{array}$ In calculating their net operating loss,and with respect to the above amounts only,what amount must be added back to taxable income (loss)?

Question

Steve and Holly have the following items for the current year: $\begin{array}{lr}
\text { Dividend income } & \$ 8,000 \
\text { Interest income } & 7,000 \
\text { Itemized deductions (none of the amount resulted from a casualty loss) } &(13,000)\
\text { Business capital gains } &   1,000\
\text { Business capital losses } & (5,000)\
\hline
\end{array}$ In calculating their net operating loss,and with respect to the above amounts only,what amount must be added back to taxable income (loss)?

Quizplus · Accepted Answer

The correct answer is C.The net operating loss is calculated by adding back to taxable income any deductions that are not allowed in the calculation of the loss. In this case, the only deduction that is not allowed is the capital loss. Therefore, the amount that must be added back to taxable income is $5,000.

Steve and Holly Have the Following Items for the Current