Calculate the tax liability with and without net operation

Reference no: EM13519067

Michael Rambo, single and calendar year taxpayer, is the sole owner of Slice-It Pizza Company, a sole proprietorship. Michael materially participated in the activity. In 2014, Slice-It Pizza reported revenues of $600,000 and deductions of $410,000, exclusive of a net operating loss deduction of $150,000.

The NOL was carried forward from 2013. For tax purposes, Michael reports revenues and expenses of Slice-It Pizza on Schedule C of Form 1040-Individual Income Tax Return. If Michael has no other taxable income, deductions or credits in 2014, other than those listed above, what tax effect does the $150,000 NOL have on his 2014 tax return? Ignore liability for self-employment taxes.
(calculate the tax liability with and without the net operating loss (NOL) and determine the impact of the NOL on the tax liability)

Reference no: EM13519067

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