Answer to Question #43365 in Microeconomics for Seth Morgan

Question

Tonya had the following items for last year:

Salary

$40,000

Short-term capital gain

$12,000

Nonbusiness bad debt

($10,000)

Long-term capital loss

($8,000)



For the current year, Tonya had the following items:

Salary

$45,000

Collection of last year’s bad debt

$12,000



Determine Tonya's adjusted gross income for the current year.

Answer 1

Adjusted gross income = total gross income - deductions.
TGI = Salary + Capital gains (losses) = $45,000 + $12,000 - $8,000 = $49,000
AGI = $49,000 - $12,000 $37,000