Question

During the year, Earl had the following transactions:

Salary 90,000
Short-term capital gain from a stock investment 4,000
Received repayment of20,000 loan she made to her brother (includes no interest) 20,000
State income taxes (5,000)

Earl's AGI is:
1) $83,000.
2) $94,000.
3) $114,000.
4) $103,000.
5) $98,000.

Answer 1

To calculate Earl's Adjusted Gross Income (AGI), we add up all of her income from various sources and make certain adjustments. Earl's AGI is $109,000. None of the above options are correct.

Step-by-step explanation:

To calculate Earl's Adjusted Gross Income (AGI), we need to add up all of her income from various sources and make certain adjustments. Earl's transactions during the year include:

1. 
   
3. Salary: $90,000
4. 
   
6. Short-term capital gain from a stock investment: $4,000
7. 
   
9. Received repayment of loan made to her brother: $20,000
10. 
    
12. State income taxes: ($5,000)

To calculate AGI, we subtract the state income taxes from the total income:

AGI = Salary + Short-term capital gain + Received loan repayment - State income taxes

AGI = $90,000 + $4,000 + $20,000 - $5,000

AGI = $109,000

Therefore, Earl's AGI is $109,000.