Randy and Randi Randall
Randy and Randi Randall are the parents of two preschool children. They started a business in 2018, making and installing window treatments. For 2018, the business generated $75,000 in sales and incurred deductible expenses of $138,000.
Randi also works part-time as a hairstylist to help make ends meet. During 2018, she earned $25,000, and her employer withheld $2,000 in federal income taxes and $700 in state income taxes.
Randy won $5,000 in groceries in a contest at the local supermarket. He also earned $500 in interest on some corporate bonds that he inherited several years ago.
The Randalls sold a number of stocks that they had been holding for years and generated a
Required:
Show all your work. Ignore any self-employment taxes.
- Calculate the Randalls’ taxable income or loss for tax purposes.
- Calculate the Randalls’ net operating loss (NOL) for 2018.
- Assume that the Randalls have taxable income of $40,000 in 2019. Can they apply their NOL to it, and, if so, what is the amount that can be applied?
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