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20 July, 09:07

Nell, single and age 38, had the following income and expense items in Nonbusiness bad debt $ 6,000 Business bad debt 2,000 Nonbusiness long-term capital gain 4,000 Nonbusiness short-term capital loss 3,000 Salary 50,000 Interest income 3,000 Determine Nell's AGI for 2016.

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  1. 20 July, 09:20
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    Nell's AGI for 2016 is $48,000

    Explanation:

    The computation is shown below:

    = Salary income + interest income - Business bad debt - net loss

    where,

    Net loss = - Non business short-term capital loss - Non business bad debt + Non business long-term capital gain

    = - $3,000 - $6,000 + $4,000

    = - $5,000

    But the capital loss would be $3,000

    So, the adjusted gross income would be

    = $50,000 + $3,000 - $2,000 - $3,000

    = $48,000
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