Mr. and Mrs. Nelson operate a small business as a sole proprietorship. This year, they have the following tax information. Compute Mr. and Mrs. Nelson's AGI.

Question

Mr. and Mrs. Nelson operate a small business as a sole proprietorship. This year, they have the following tax information.  Compute Mr. and Mrs. Nelson's AGI.

Quizplus · Accepted Answer

To calculate AGI, we need to add up all income sources and subtract any allowed deductions.

Income sources: 
- Business income: $64,200 
- Interest income: $2,000 
- Long-term capital gain: $1,500

Total income: $67,700

Deductions: 
- Business expenses: $10,000 
- Self-employment tax deduction: $3,333

Total deductions: $13,333

AGI = Total income - Total deductions 
AGI = $67,700 - $13,333 
AGI = $54,367

Therefore, the correct answer is B) $47,367

Mr and Mrs