Jack, Age 30 and Married with No Dependents, Is a Self-Employed

question 51

Multiple Choice

Jack, age 30 and married with no dependents, is a self-employed individual. For 2019, his self-employed business sustained a net loss from operations of $10,000 from operations . The following additional information was obtained from his personal records for the year: $\begin{array}{lr}\text { Nonbusiness long-term capital gain } & \$ 2,000 \\\text { Interest income } & 6,000 \\\text { Itemized deductions-consisting of taxes and interest } & (26,000) \end{array}$ Based on this information, what is Jack's net operating loss for 2019 if he and his spouse file a joint return?

• A) ($2,000)
• B) ($8,000)
• C) ($10,000)
• D) ($25,000)
• E) ($28,000)

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Definitions:

Common-Size Balance Sheet

A balance sheet that displays each line item as a percentage of total assets, facilitating comparison with other companies regardless of size.

Percentage of Net Assets

This refers to a metric that calculates what portion of a company’s total net assets is represented by a particular investment or asset class.

Retained Earnings Account

An equity account that represents the accumulated portion of net income left over after dividends are paid to shareholders.

Cumulative Earnings

The total net income of a company since its inception, minus any dividends paid to shareholders.