During 2017, Sarah had the following transactions: $\begin{array}{lr}
\text { Salary } & \$ 80,000 \
\text { Interest income on City of B altimore bonds } & 1,000 \
\text { Damages for personal injury (car accident) } & 100,000 \
\text { Punitive damages (same car accident) } & 200,000 \
\text { Cash dividends from Chevron Corporation stock } & 7,000
\end{array}$ Sarah's AGI is:

Question

Quizplus · Accepted Answer

Interest income on municipal bonds (like those from the City of Baltimore) is generally exempt from federal income tax. Damages received for personal injury are also typically not taxable. However, punitive damages, regardless of the reason, are taxable. Therefore, Sarah's AGI would include her salary ($80,000), punitive damages ($200,000), and dividends ($7,000), totaling $287,000.

During 2017, Sarah Had the Following Transactions Sarah's AGI Is: A)$185,000

During 2017, Sarah Had the Following Transactions Sarah's AGI Is:
A)$185,000