Question

Tonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (23,000) Long-term capital gain 8,000 For the current year, Tonya had the following items: Salary $45,000 Long-term capital gain 5,000 Determine Tonya's adjusted gross income for the current year. A. $43,000 B. $45,000 C. $48,000 D. $50,000 E. $53,000

Answer 1

Answer:

D) $50,000

Explanation:

Tonya's adjusted gross income = salary + long term capital gains = $45,000 + $5,000 = $50,000

Non-business bad debt is unrelated to the person's business, and must be totally worthless in order to be deducted. In this case, Tonya deducted the non-business bad debt last year, so it doesn't affect this year's AGI.