Hi so i came accross this question and what really got me is that they included rental income into the NOL computation which doesnt make sense since it is a passive activity. I am assuming that passive activity gains are included in the NOL computation?
Destry, a single taxpayer, reported the following on his U.S. Individual Income Tax Return (Form 1040):
Income:
Wages $5,000
Interest on savings account 1,000
Net rental income 4,000
Deductions:
Personal exemption $ 4,000
Standard deduction 6,300
Net business loss 16,000
Net short-term capital loss 2,000
What is Destry's net operating loss that is available for carryback or carryforward?
A.
$7,000
B.
$9,000
C.
$15,700
Incorrect D.
$16,000
.
