Question

carl, a physician, earns $200,000 from his medical practice in the current year. he receives $40,000 in dividends and interest during the year as well as $5,000 of income from a passive activity. in addition, he incurs a loss of $50,000 from an investment in a passive activity. what is carl's agi for the current year after considering the passive investment?

Answer 1

According to the given information, Carl's AGI for the current year after considering the passive investment is $240,000

Calculation of AGI for the current year

Income from Medical practice = $200,000

Dividend income = $40,000

Income from Passive activity = $5,000

Loss from passive activity maximum to the extent of passive activity income = Income from Medical practice + Dividend income + Income from Passive

  activity - $5,000

= $200,000 + $40,000 + $5,000 - $5,000

∴ Total AGI for the year = $240,000

• Your annual income tax liability is calculated by the IRS using your adjusted gross income (AGI).
• Your gross income for the year is used to calculate your AGI, which is then reduced by a number of income adjustments.
• The size of your tax deductions and your eligibility to contribute to certain types of retirement plans, such as a Roth individual retirement account, can both be impacted by your AGI.
• Your AGI less a few otherwise permitted deductions is known as your modified adjusted gross income (MAGI). AGI and MAGI are likely to be similar for many people.
• When determining your AGI, alimony payments and educator costs are among the things deducted from your gross income.

Learn more about Adjusted Gross Income (AGI), here

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