Problem: During the year, Karen, a single taxpayer, reports the following income

Question

Problem:
During the year, Karen, a single taxpayer, reports the following income and expense items relating to her interior design business:
Revenues $52,000
Cost of goods sold 41,000
Advertising 3,300
Office supplies 1,700
Rent 13,800
Contract labor 28,000
Karen also worked part-time during the year, earning $13,500. She reports a long-term capital gain of $4,200, and a short-term capital loss of $3,800. Her itemized deductions total $5,200.
a. What is Karen’s taxable income or loss for the year?
b. What is Karen’s NOL for the year?

Explanation / Answer

a. Taxable Income (Loss) = $52,000-$41,000-$3,300-$1,700-$28,000-$13,800+$13,500+$400-$5200 = ($27,100) b. Net Operating Loss = $27,100

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