Carl, a physician, earns $200,000 from his medical practice in the current year. He receives $45,000 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?
A) $195,000
B) $200,000
C) $240,000
D) $245,000
E) None of the above

Question

Quizplus · Accepted Answer

Carl's AGI is calculated by adding his medical practice income ($200,000) and dividends and interest ($45,000), totaling $245,000. The passive activity income and loss do not affect AGI because passive losses can only offset passive income, and Carl's passive loss exceeds his passive income.

Carl, a Physician, Earns $200,000 from His Medical Practice in the Current