In 2010,Bob's Unincorporated Business Has a Net Loss of $12,000

question 5

Essay

In 2010,Bob's unincorporated business has a net loss of $12,000.Bob has investment income of $15,000.Itemized deductions and personal exemptions total $13,000.Thus,on his 2010 tax return,his taxable income was a negative $10,000.In 2010,Bob discovered that an employee has stolen $14,000 (pocketing the proceeds from unrecorded sales)from the business.This $14,000 theft loss is included in calculating the net loss of Bob's business of $12,000.In 2011,Bob recovers the $14,000 from the former employee.How can the tax benefit rule assist Bob in 2011?

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