Final answer:
Debbie's adjusted gross income (AGI) is likely $200,000 from taxable interest, as there is no information suggesting that her Social Security benefits are taxable. Hence, the correct answer would be Option b.
Step-by-step explanation:
The subject of the student's question is the determination of adjusted gross income (AGI) for Debbie, age 67, who is unmarried with a particular set of financial circumstances.
When calculating AGI, taxable interest and other income sources are considered. According to the information provided, Debbie earns $200,000 in taxable interest and $20,000 from Social Security benefits.
It is important to recognize that not all of the Social Security benefits may be taxable depending on her income level and filing status.
In this simplified example, we are not given information on which portion of Social Security benefits, if any, is taxable. Therefore, if we assume initially that none of the Social Security benefits are taxable, Debbie's AGI would be her taxable interest income, which is $200,000 (Option b).
The adjusted gross income for Debbie can be calculated by adding her taxable interest and Social Security benefits. Debbie's taxable interest is $200,000 and her Social Security benefits are $20,000.
Therefore, her adjusted gross income for the year is $220,000 (200,000 + 20,000 = $220,000).