Please answer the following as accurately as possible.
1. A net operating loss (NOL) may be carried forward if a proper election is made. Which of the following statements about the election is NOT correct.
A. Once the election is made, you can use the net operating loss only in the
20-year carry-forward period.
B. To
make the election, you attach a statement to your tax return filed by the due
date (including extensions) for the net operating loss year.
C.
Once the election is made to waive the carry back period for one net operating
loss, it remains in effect for all subsequent net operating losses.
D. If
you filed your return timely, but did not attach the election statement, you
have 6 months from the due date of your original return (excluding extensions)
to file the statement with an amended return for the net operating loss year.
2. Stephanie owns and operates a small flower shop that generated a $7,000 loss in 2008. She told some of the land she uses for the business at a $3,000 gain, and some business equipment at a loss of $1,000. She also earned $1,750 from her part-time job as a supermarket cashier. She earned $450 in interest on her personal savings account in 2008. Stephanie files as single and claims the standard deduction. Her exemption and standard deduction amounts for 2008 are $3,500 and $5,450 respectively. Her net operating loss (NOL) for 2008 is:
A. $2,250.
B. $10,600.
C. $2,800.
D. $3,250.
3. Tom Thumb owned a greenhouse that was built on leased land. He used the greenhouse one half for business and one-half for personal uses. In 2008, the greenhouse was totally destroyed by a hurricane. The greenhouse cost $500,000 to build, had a fair market value of $300,000 and accumulated depreciation of $50,000 when it was destroyed. Tom received $250,000 from his insurance company in 2008 to reimburse him for the loss. Tom's adjusted gross income for 2008 is $54,000. What is the amount of Tom's deductible loss on the greenhouse for 2008?
A. $150,000.
B.
$44,500.
C.
$25,000.
D.
$94,500.
4. Which of the following statements pertaining to a net operating loss (NOL) is incorrect?.
A. The carry back period for a farming loss is 5 years.
B. If
you choose not to carry back an NOL then you can use the NOL only in the 20-year
carry forward period.
C. To
waive the carry back of an NOL, a separate statement must be submitted within 6
months of the original NOL year return's due date (including extensions).
D. If
you do not use an NOL within the 2-year carry back and 20-year carry forward
period, you lose any remaining NOL forever.
5. Which of the following losses generally would not generate a net operating loss:
A. Loss from trade or business.
B.
Casualty or theft loss.
C.
Loss from rental property.
D.
Loss created by sale of personal residence for less that its cost.
6. All of the following statements about foregoing the net operating loss (NOL) carry-back period are correct except:
A. To make the election, you attach a statement to your tax return filed by the
due date (including extensions) for the NOL year.
B. A taxpayer has three years to amend a prior year's return to include the
election.
C. Once the election is made, the taxpayer cannot later revoke the election.
D. Once the election is made, you can use your NOL only in the 20 year
carry-forward period.
7. What is Sam's (a single taxpayer) net operating loss for the current year based on the following information?
| Wages from a part time job $10,000 |
| Interest on savings $500 |
| Net long term capital gain on sale of business asset $5,000 |
| Net loss from business $20,000 (Gross income $60,000 minus $80,000 expenses) |
| Net short term capital loss on stock sale $3,000 |
| 2008 standard deduction $5,450 |
| 2008 personal exemption $3,500 |
A. $4,500.
B.
$5,000.
C.
$7,500.
D.
$14,950.
8. A corpor
