Final answer:
Marc's adjusted gross income (AGI) is $32,000, calculated by subtracting the allowable $3,000 capital loss from his $35,000 ordinary income, while the long-term capital gains are taxed separately and not included in the AGI calculation.
Step-by-step explanation:
To calculate Marc's adjusted gross income (AGI) for the current year, we first need to address his capital gains and losses. Marc has $3,000 in short-term capital gains and $6,000 in short-term capital losses. The losses offset the gains, so there is a net capital loss of $3,000. However, the net capital loss can only reduce his ordinary income up to $3,000 in one tax year. His long-term capital gains of $4,000 are treated separately and will be subject to different tax rates.
Marc's AGI would be:
- Ordinary income: $35,000
- Net short-term capital loss: -$3,000 (up to the limit that can be applied against ordinary income)
- Long-term capital gains: Not included in AGI calculation as they are taxed separately
Therefore, Marc's AGI would be: $35,000 (ordinary income) - $3,000 (capital loss) = $32,000.
It is important to note that taxable income is then calculated by subtracting the relevant deductions and exemptions from the AGI. These deductions might include the standard deduction, itemized deductions, and various other adjustments that could further reduce taxable income from the AGI.