The Adjusted Gross Income of Rocco's salon is $28,934
Operating income from salon:
= Salon revenue - Salaries paid to beauticians - Beauty supplies expense
= $86,360 - $45,250 - $23,400
= $17,710.
Apartment building income:
= Apartment building revenue - Depreciation on apartment building - Real estate taxes on apartment building
= $31,220 - $12,900 - $11,100
= $7,220.
Half of the self employment taxes paid is seen as deduction. For AGI computation, the tax is
= $2,502*1/2
= $1251
The Adjusted Gross Income:
= Interest income + Operating income from salon + Apartment building income - Self employment taxes - Alimony
= $11,250 + $17,710 + $7,220 - $1,251 - $6,000
= $28,929.
Therefore, the Adjusted Gross Income of Rocco's salon is $28,934
Full question:
[The following information applies to the questions displayed below.] Rocco operates a beauty salon as a sole proprietorship. Rocco also owns and sents an apartment building. In 2022. Rocco had the following income and expenses, You may assume that Rócco will owe $2,502 in selfemployment tax on his salon income, with $1,251 representing the employer portion of the self-employment tax. You may also assume that his divorce from Svetlana was finalized in 2016. Problem 6-31 Part-a (Static) Determine Rocco's AGI.