Norma Formed Hyacinth Enterprises,a Proprietorship,in 2008

Multiple Choice

Norma formed Hyacinth Enterprises,a proprietorship,in 2008.In its first year,Hyacinth had operating income of $150,000 and operating expenses of $100,000.In addition,Hyacinth had a long-term capital loss of $4,000.Norma,the proprietor of Hyacinth Enterprises,withdrew $25,000 from Hyacinth during the year.Assuming Norma has no other capital gains or losses,how does this information affect her taxable income for 2008?

A) Increases Norma's taxable income by $25,000.
B) Increases Norma's taxable income by $21,000 ($25,000 income - $4,000 long-term capital loss) .
C) Increases Norma's taxable income by $47,000 ($50,000 income - $3,000 long-term capital loss) .
D) Increases Norma's taxable income by $50,000.
E) None of the above.