Question

Janice, single, had the following items for the year 2013:

Salary $30,000
Dividend income 8,000
Loss on 1244 small business stock held for three years (45,000) Total itemized deductions (5,000)
Determine Janice's net operating loss for the year 2013.

Answer 1

Janice's net operating loss for 2013 is calculated by summing her income, subtracting business losses, and then subtracting itemized deductions. Her net operating loss amounts to $12,000.

Step-by-step explanation:

To calculate Janice's net operating loss (NOL) for the year 2013, we need to consider her income, losses, and deductions. The NOL is essentially the excess of allowable deductions over gross income. Let's break down the components:

Salary: Janice earned a salary of $30,000. This is part of her gross income.

Dividend Income: Janice received dividend income amounting to $8,000. This is also included in her gross income.

Loss on 1244 Small Business Stock: Janice experienced a loss of $45,000 on 1244 small business stock held for three years. This loss is a deduction from her income.

Total Itemized Deductions: Janice had total itemized deductions of $5,000. These deductions further reduce her taxable income.