Response to the following:
1. Net Operating Loss
a. What is meant by an NOL?
b. Can an individual who does not operate a business have an NOL? Explain
c. For what taxable years may an NOL created in 2014 be used as a deduction for AGI?
2. Net Operating Loss
a. What types of adjustments must be made in order to convert negative taxable income into an NOL?
b. Carlos (single) reports on his 2014 tax return negative taxable income of $38,150. Included in this amount is business income of $70,000 and business deductions of $98,000. Carlos took the standard deduction and claimed one personal exemption. Compute Carlos's 2014 NOL assuming that no other adjustments are necessary.