Steve and Holly Report the Following Items for 2019 In Calculating Their Net Operating Loss, and with Respect to

question 113

Multiple Choice

Steve and Holly report the following items for 2019: $$\begin{array} { l r } \text { Dividend income } & \$ 16,000 \\\text { Interest income } & 14,000 \\\text { Itemized deductions (none of the amount resulted from a casualty loss) } & ( 26,000 ) \\\text { Business capital gains } & 2,000 \\\text { Business capital losses } & ( 10,000 ) \end{array}$$ In calculating their net operating loss, and with respect to the above amounts only, what amount must be added back to taxable income (loss) ?

• A)$0
• B)$2,000
• C)$4,000
• D)$6,000
• E)None of these.

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Definitions:

Economic Profits

The surplus achieved when revenue generated from business activities exceeds both explicit and implicit costs.

Long Run

A period of time in which all factors of production and costs are variable, and firms can adjust all inputs.

Competitive Price-searcher

A market condition where sellers actively set prices and seek to differentiate their products in an effort to attract consumers in a competitive environment.

Economic Losses

Financial losses incurred by businesses or economies, often due to inefficiencies, misallocation of resources, or external factors.