Question

In 2016, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss.Table for the standard deduction Filing Status 2016 Standard DeductionSingle $ 6,300Married, filing jointly 12,600Married, filing separately 6,300Head of household 9,300Qualifying widow(er) 12,600Calculate the following amounts for Lou:a. Adjusted gross income $b. Standard deduction $c. Exemption $d. Taxable income

Answer 1

Answer:

Explanation:

A) Adjusted gross income = Salary+Interest income+Dividend Income-Capital loss deduction limitation = 53,300 + 1,600 + 400 - 3,000 = 52,300

*The capital loss is limited to $3,000 as deduction

B) The deduction amount for single is $6,300

C) Personal exemption deduction for 2016 is $4,050

D)

Adjusted Gross income 52,300

Less: Deductions

Standard deduction in 2016: (6300)

Personal exemption (4050)

Taxable income 41,950