$25,000 is the amount of martha's taxable income after deducting the allowed capital loss
Martha's taxable income after deducting the allowed capital loss is $25,000. Capital losses can be used to offset capital gains, but they can only be deducted up to a maximum of $3,000 against ordinary income each year.
Therefore, Martha can deduct $3,000 of her $20,000 capital loss against her $45,000 of ordinary income, leaving her with a taxable income of $25,000 ($45,000 - $20,000 - $3,000 = $25,000).
The net income remaining after all federal, state, and withholding taxes have been subtracted is known as after-tax income. The amount of disposable money that a customer or business has available to spend is known as after-tax income, often known as income after taxes.
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