In 2019, Theo, a single taxpayer, operates a sole proprietorship in which he materially participates. His proprietorship generates gross income of $320,000 and deductions of $600,000, resulting is a loss of $280,000. The large deductions are due to the acquisition of equipment and the use of immediate expense and additional first-year depreciation to deduct all of the acquisitions. What is Theo's excess business loss for the year?

a.$25,000.

b.$250,000.

c.$280,000

d.$-0-.

e. None of these choices are correct.

e. None of these choices are correct.

Explanation:

According to the business Excess loss defined by the IRS (International Revenue Services) as follows:

The aggregate deduction

(-) Gross income of the taxpayer

(-) Threshold amount ($250,000 for all the taxpayers except married person)

Total Excess business loss

Here,

Gross Income = $320,000; Deductions = $600,000;

Therefore,

The aggregate deduction $600,000

(-) Gross income of the taxpayer $ (320,000)

(-) Threshold amount $ (250,000)

Total Excess business loss $ (30,000)

As the taxpayer is not married, he will get the benefit of threshold amount.

Therefore, Total Excess business loss $ (30,000), and no option gives the correct answer.