Reference no: EM132792247

Problem 1: This year, Sven opened a golf clinic structured as a sole proprietorship. For the six months the business was in operation, he recorded a net business loss of $37,500. During the winter months, Sven worked as a salaried employee at a health club. His income from the health club for this year was $19,300. Last year, Sven worked full-time at the health club and earned $44,000. What statement is true?

a) For this year, Sven can record ($18,200) as his total income on his personal income tax return (i.e. total income of negative $18,200).
b) Sven can apply to adjust his tax return for last year and carry back $18,200 in non-capital losses from this year to reduce the employment income he earned from the health club last year.
c) This year, Sven has realized an allowable business investment loss (ABIL).
d) Sven can carryforward a portion of his business loss from this year to reduce his taxable income in a future year. However, his business loss can only be used to offset future taxable capital gains.