Norma Formed Hyacinth Enterprises, a Proprietorship, in 2012

Multiple Choice

Norma formed Hyacinth Enterprises, a proprietorship, in 2012.In its first year, Hyacinth had operating income of $400,000 and operating expenses of $240,000.In addition, Hyacinth had a long-term capital loss of $10,000.Norma, the proprietor of Hyacinth Enterprises, withdrew $75,000 from Hyacinth during the year.Assuming Norma has no other capital gains or losses, how does this information affect her taxable income for 2012?

A) Increases Norma's taxable income by $157,000 ($160,000 ordinary business income - $3,000 long-term capital loss) .
B) Increases Norma's taxable income by $150,000 ($160,000 ordinary business income - $10,000 long-term capital loss) .
C) Increases Norma's taxable income by $75,000.
D) Increases Norma's taxable income by $160,000.
E) None of the above.