Question

Considering $542,500 taxable income with $64,000 long-term capital gain taxed at preferential rates, what's the modified AGI of $570,000 indicative of?

Option a: A higher proportion of deductions applied.
Option b: Minimal adjustments made to taxable income.
Option c: Tax-exempt investment options utilized.
Option d: Additional income sources contributing to the AGI.

Answer 1

The modified AGI of $570,000, which includes a taxable income of $542,500 and a long-term capital gain of $64,000, is indicative of minimal adjustments made to taxable income.

Step-by-step explanation:

The modified AGI of $570,000, which includes a taxable income of $542,500 and a long-term capital gain of $64,000, is indicative of minimal adjustments made to taxable income. Modified AGI refers to the adjusted gross income (AGI) after certain modifications or adjustments have been made. In this case, the AGI includes the taxable income and the long-term capital gain, but there are no additional income sources contributing to the AGI. Therefore, option b: Minimal adjustments made to taxable income, is the correct answer.