Question

Mike, an attorney, earns $200,000 from his law practice and receives $45,000 in dividends and interest during the year. In addition, he incurs a loss of $50,000 from an investment in a passive activity acquired three years ago. After considering the passive investment, Mike's net income for the current year is $ ?

Answer 1

Mike's net income for the current year is $245,000.

Step-by-step explanation:

Net income for current year

= Professional income + Dividend and Interest Income

= $200,000 - $45,000

= $245,000

Therefore, Mike's net income for the current year is $245,000.