During the year, Sara sold a capital asset at a loss of $2,000. She had held the asset as an investment. This is the only capita

Question

marin [14]

3 years ago

8

During the year, Sara sold a capital asset at a loss of $2,000. She had held the asset as an investment. This is the only capita

l asset she sold during the year. Is her deduction for this capital loss a deduction for or a deduction from AGI

Business

1 answer:

Sedbober [7] · Answer 1 · 2022-08-10T21:34:36+03:00

<u>Answer: </u>A deduction for a loss incurred on the sale of a capital asset held for investment is a deduction for AGI.

<u>Explanation:</u>

AGI means the Adjusted gross income in the US tax system. Specific deductions are made from the individuals gross income to arrive at the AGI. the income which is taxable is calculated from the adjusted gross income from which personalized exemptions and itemized deductions.

In this case Sara has got a loss of $2,000 on the investment so this amount is deducted as a capital loss for AGI. AGI factors many allowable deductions from the gross income on which the income tax liability is calculated.