Question

Sam's taxable income for 2020 before any deduction for an NOL carryforward of $30,000 is $70,000. What is Sam's NOL deduction for 2020?

Answer 1

Sam's NOL deduction for 2020 would be $32,000.

Step-by-step explanation:

To calculate Sam's NOL deduction for 2020, we need to know his taxable income after the NOL carryforward. Since his taxable income before the NOL carryforward is $70,000 and the NOL carryforward is $30,000, his taxable income after the NOL carryforward is $70,000 - $30,000 = $40,000.

The NOL deduction for an individual taxpayer is generally limited to 80% of the taxable income for the year. So, Sam's NOL deduction would be 80% of $40,000, which is $32,000.

Therefore, Sam's NOL deduction for 2020 would be $32,000.