Net Operating Loss (Ninja Wrong?) Please explain

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    Stgeorge
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    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

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