Final answer:
Cindy's adjusted gross income (AGI) for 2016 is calculated by adding her salary, capital gains, and interest income, then subtracting her moving expenses. The state income tax is not subtractible from AGI. Her AGI is $103,000, which makes the correct answer B. $103,000.
Step-by-step explanation:
To calculate Cindy's adjusted gross income (AGI), we need to consider all of her income and adjustments to income. Here's the breakdown of the transactions:
- Salary: $90,000
- Short-term capital gain from a stock investment: $4,000
- Moving expense to change jobs: ($11,000) - Note that after 2017, moving expenses are no longer deductible for most taxpayers due to tax law changes, but they were still valid in 2016.
- Interest on loan she made to her sister: $20,000 (since this includes no repayment of principal, it is considered income)
- State income taxes: ($5,000) - These are an itemized deduction, not an adjustment for AGI.
Therefore, Cindy's AGI would be calculated as follows:
- Salary + Short-term capital gain + Interest on loan - Moving expenses
- $90,000 + $4,000 + $20,000 - $11,000 = $103,000
The correct answer is B. $103,000.