Question

Randy received 2,720 of interest this year and no other investment income or expenses. His AGI is75,000. What is Randy's taxable income?

1) $2,720
2) $75,000
3) Cannot be determined
4) None of the above

Answer 1

Randy's taxable income would be his AGI minus any applicable standard deduction and personal exemption, not just his AGI or interest income alone. Without additional information about his deductions, the exact taxable income cannot be determined, so 'None of the above' is the correct answer.

Step-by-step explanation:

Randy's taxable income is determined by taking his adjusted gross income (AGI) and subtracting any deductions or exemptions he is eligible for. Since Randy's AGI is $75,000 and he received no other investment income or expenses, the interest income he received becomes part of his AGI. Without specific information on his deductions or exemptions, we assume they are zero or he is taking the standard deduction for a single person. If we consider just a simple scenario with only the standard deduction and a single exemption being taken, Randy's taxable income would actually be his AGI minus these deductions. The current tax code provides a standard deduction, and for singles in previous years, this has been in the range of a few thousand dollars. If Randy qualifies for the standard deduction and no other deductions or exemptions apply, his taxable income would be somewhat less than his AGI of $75,000. Therefore, the correct answer is '4) None of the above' because the taxable income cannot be calculated precisely without additional information on Randy's deductions or exemptions.