Liz, who is single, lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate. Liz had the following items of income and expense during the current year. Income: Expenses: What is her adjusted gross income for the year?
A) $52,700
B) $61,100
C) $62,200
D) $68,000

Question

Liz, who is single, lives in a single family home and owns a second single family home that she rented for the entire year at a fair rental rate. Liz had the following items of income and expense during the current year. Income:  Expenses:  What is her adjusted gross income for the year?
A) $52,700 
B) $61,100 
C) $62,200 
D) $68,000

Quizplus · Accepted Answer

- Liz's rental income ($25,000) and wages ($46,200) add up to $71,200. 
- From this, we subtract her rental expenses ($8,000), self-employment tax ($3,150), IRA contribution ($5,000), and half of her self-employment tax as an adjustment ($1,575). 
- This gives us an adjusted gross income of $62,200.

Liz, Who Is Single, Lives in a Single Family Home