2. S1: The excess of allowable deductions over gross sales is net operating loss. S2: Net operating loss is a deduction from gross income even if the taxpayer chose optional standard deduction. S3: If net operating loss is incurred in 2021, the taxpayer can carry over the loss in the immediately succeeding three (3) years Which is TRUE?

2. S1: The excess of allowable deductions over gross sales is net operating loss. S2: Net operating loss is a deduction from gross income even if the taxpayer chose optional standard deduction. S3: If net operating loss is incurred in 2021, the taxpayer can carry over the loss in the immediately succeeding three (3) years Which is TRUE?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter9: Deductions: Employee And Self-employed-related Expenses

Section: Chapter Questions

Problem 6BCRQ

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LO.3, 4, 5 Using the legend provided below, classify each statement under 2019 tax law. a. A foreign tax credit is available. b. The deduction of charitable contributions is subject to percentage limitation(s). c. Excess charitable contributions can be carried forward for five years. d. On the contribution of inventory to charity, the full amount of any appreciation can be claimed as a deduction. e. Excess capital losses can be carried forward indefinitely. f. Excess capital losses cannot be carried back. g. A net short-term capital gain is subject to the same tax rate as ordinary income. h. The deduction for qualified business income may be available. i. A dividends received deduction is available. j. The like-kind exchange provisions of 1031 are available. k. A taxpayer with a fiscal year of May 1April 30 has a due date for filing a Federal income tax return of July 15. l. Estimated Federal income tax payments may be required.
LO.2 Osprey Corporation, an accrual basis taxpayer, had taxable income for 2019 and paid 40,000 on its estimated state income tax for the year. During 2019, the company received a 4,000 refund upon filing its 2018 state income tax return. The company filed its 2019 state income tax return in August 2020 and paid the 7,000 state income tax due for 2019. In December 2019, the company received a notice from the state tax commission that an additional 6,000 of income tax was due for 2017 because of an error on the return. The company acknowledged the error in December 2019 and paid the additional 6,000 in tax in February 2020. What is Ospreys 2019 Federal income tax deduction for state income taxes?
LO.3, 8, 9 The taxpayer has generated excess capital losses (both short-term and long-term) for the current year. Discuss the income tax ramifications of the losses if the taxpayer is: a. An individual. b. A C corporation. c. An S corporation. d. A partnership.
LO.3 Green Corporation, a calendar year taxpayer, has ordinary income of 10,000 and a long-term capital loss of 12,000 in 2019. Green incurred a long-term capital gain of 2,500 in 2016 and a long-term capital gain of 5,000 in 2018. a. How much of the long-term capital loss can be deducted in 2019? b. Carried back to prior years? c. Carried forward to future years? d. What is the nature (long- or short-term) of any carrybacks or carryforwards?