Question

A single taxpayer earns $500,000 of salary income and $20,000 of interest income in 2019. The taxpayer is a material participant in the partnership. His share of the partnership's loss for the year is $300,000. The taxpayer will report AGI of ________.
A) $520,000.B) $270,000.C) $220,000.D) $250,000.

Answer 1

Answer:

$220,000,

Explanation:

Given that:

• $500,000 of salary income

• $20,000 of interest income in 2019

So the total income of the taxpayer is: $500,000 + $20,000 = $520,000

As we know that, AGI (Adjusted gross income) is used to calculate how much income of a taxpayer is taxable. They are expenses incurred by the earner which are deducted before taxing.

In this situation, his share of the partnership's loss for the year is $300,000, so the taxpayer will report an AGI of:

$520,000  -  $300,000

=  $220,000

I hope it will find you well.

Answer 2

Answer: C. $220,000

Explanation:

GIVEN THE FOLLOWING ;

Salary income = $500,000

Interest income = $20,000

Share of partnership loss = $300,000

The adjusted gross income may be explained as an individual's gross income( total income made before tax deductions) or Pretax income. However, not all Pretax income are taxable, therefore, the taxable income of an individual's gross income is called the ADJUSTED GOSS INCOME. Therefore, adjustment such as losses incurred by an individual is deducted from the individual's gross income, leaving the such individual with the taxable income called The Adjusted Gross income(AGI).

In these scenario,

Gross income = salary income + interest income

Gross income = $500,000 + $20,000 = $520,000

Adjusted Gross Income = Gross income - share of partnership loss

AGI = $520,000 - $300,000 = $220,000