Mavis,age 70,is single with no dependents.The following information was obtained from her personal records for the current year: Based on the above information,what is Mavis's net operating loss for the current year?

Question

Mavis,age 70,is single with no dependents.The following information was obtained from her personal records for the current year:  Based on the above information,what is Mavis's net operating loss for the current year?

Quizplus · Accepted Answer

Mavis's net operating loss for the current year can be calculated as follows:

Business income: $59,000
Business expenses:
- Rent: $18,000
- Office supplies: $4,200
- Travel expenses: $5,800
- Depreciation: $10,000
- Meals and entertainment (50% deductible): $2,100
Total business expenses: $40,100

Net business income: $59,000 - $40,100 = $18,900

Since Mavis has no other income or deductions, her net operating loss for the year is equal to her net business income of $18,900. However, the maximum net operating loss that can be deducted for the year is $20,000, so that is the amount of her net operating loss for the current year.

Mavis,age 70,is Single with No Dependents