John and Sally are married and file a joint return for 2012. They have an NOL of $5,000. They carry the NOL back to 2010, a year in which John and Sally filed separate returns. Figured separately, Sally's 2012 deductions were more than her income and John's income was more than his deductions.
1. Which one of the following statements is true?
a) John does not have any NOL to carry back. Sally can carry back the entire $5000 NOL to her 2010 separate return.
b) Sally does not have any NOL to carry back. John can carry back the entire $5000
c) NOL to his 2009 separate return.
d) John and Sally can each carry back $2500 to their 2009 returns.
e) None of the above
2. When should the alternative minimum tax NOL be computed?
a) Any time there is an NOL
b) Any time a casualty or theft loss has occurred
c) Whenever a taxpayer has any minimum tax adjustments or preference items in the loss year or in any year to which the loss is carried
d) Whenever the taxpayer's AGI is greater than $150,000
3. Which of the following statements is true?
a) AMT NOLs are absorbed only by alternative minimum taxable income
b) AMT NOLs are absorbed by regular taxable income
c) Both of the above
d) None of the above
4. How is an alternative tax net operation loss deduction (ATNOLD) determined?
a) By using regular taxable income
b) By using regular taxable income reduced by AMT income
c) By using AMT income reduced by regular taxable income
d) By using AMT income
1 -- John does not have any NOL to carry back. Sally can carry back the entire $5000 NOL to her 2010 separate return. This is the correct statement. Because John's income was more than his deductions, he is not able to use any part of the NOL. Sally can carry back the $5,000, as per IRS regulations for NOL carry back and carry forward.
2 -- Whenever a taxpayer has any minimum tax adjustments or ...
This solution provides the correct answers to the taxation questions listed.