Nancy reports the following income and loss in the current year. $$\begin{array} { | l | r | }
\hline \text { Salary } & \$ 60,000 \
\hline \text { Income from activity A } & 18,000 \
\hline \text { Loss from activity B } & ( 9,000 ) \
\hline \text { Loss from activity C } & ( 13,000 ) \
\hline
\end{array}$$ All three activities are passive activities with respect to Nancy. Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years. During the year, Nancy sells activity C and realizes a $15,000 taxable gain. What is Nancy's AGI as a result of these transactions?
A) $50,000
B) $55,000
C) $64,000
D) $71,000

Question

Nancy reports the following income and loss in the current year. $$\begin{array} { | l | r | } 
\hline \text { Salary } & \$ 60,000 \
\hline \text { Income from activity A } & 18,000 \
\hline \text { Loss from activity B } & ( 9,000 ) \
\hline \text { Loss from activity C } & ( 13,000 ) \
\hline
\end{array}$$ All three activities are passive activities with respect to Nancy. Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years. During the year, Nancy sells activity C and realizes a $15,000 taxable gain. What is Nancy's AGI as a result of these transactions?
A) $50,000
B) $55,000
C) $64,000
D) $71,000

Quizplus · Accepted Answer

Nancy's AGI is $50,000. The suspended losses from activity C are not deductible in the current year because Nancy disposed of the activity. The taxable gain from the sale of activity C is included in AGI.

Nancy Reports the Following Income and Loss in the Current