Question

an individual taxpayer reports the following items for the current year: items amount ordinary income from partnership x, operating a gym in which the taxpayer materially participates $85,000 net loss from partnership y, operating a boat rental business in which the taxpayer does not materially participate ($17,000) rental income from building rented to a third party $11,000 short-term capital gain from the sale of stock $12,000 what is the taxpayer's adjusted gross income for the year?

Answer 1

The taxpayer's adjusted gross income (AGI) for the year can be calculated as follows:

AGI = Gross Income - Deductions

The Gross Income is the sum of the following items:

- Ordinary income from partnership x: $85,000
- Rental income from building rented to a third party: $11,000
- Short-term capital gain from the sale of stock: $12,000

Total Gross Income = $85,000 + $11,000 + $12,000 = $108,000

The Deductions are the sum of the following items:

- Net loss from partnership y: ($17,000)

Therefore, the AGI is:

AGI = Gross Income - Deductions
AGI = $108,000 - ($17,000)
AGI = $91,000

Therefore, the taxpayer's adjusted gross income for the year is $91,000.