Question

Peter files a return as a single taxpayer. In 2017, he had the following items:

• Salary of $40,000.
• Loss of $65,000 on the sale of § 1244 stock acquired two years ago.
• Interest income of $8,000.

Peter's AGI for 2017 is:
a. $45,000.
b. ($5,000).
c. $0.
d. $48,000.
e. None of these choices are correct.

Answer 1

To calculate Peter's AGI, add up all of his income items and subtract any allowable deductions. From the given information, Peter had a salary of $40,000, a loss of $65,000 on the sale of § 1244 stock, and interest income of $8,000. The loss on the sale of the stock is an allowable deduction. Therefore, Peter's AGI is None of these choices are correct.

Step-by-step explanation:

To calculate Peter's AGI, we need to add up all of his income items and subtract any allowable deductions.

From the given information, Peter had a salary of $40,000, a loss of $65,000 on the sale of § 1244 stock, and interest income of $8,000.

The loss on the sale of the stock is an allowable deduction. Therefore, Peter's AGI can be calculated as follows:

AGI = Salary + Interest Income - Loss on Sale of Stock

AGI = $40,000 + $8,000 - $65,000

AGI = $-17,000

Since a negative AGI is not possible, the correct answer is None of these choices are correct.