Bruce, who is single, had the following items for the current year: ∙ Salary of $80,000.
∙ Gain of $20,000 on the sale of § 1244 stock acquired two years earlier.
∙ Loss of $75,000 on the sale of § 1244 stock acquired three years earlier.
∙ Worthless stock of $15,000.The stock was acquired on February 1 of the prior year and became worthless on January 15 of the current year.
Determine Bruce's AGI for the current year.
A)$27,000
B)$38,000
C)$42,000
D)$47,000
E)None of these.

Question

Quizplus · Accepted Answer

Bruce's AGI is $27,000. The gain on the sale of § 1244 stock is treated as ordinary income, while the loss on the sale of § 1244 stock is treated as a capital loss. The worthless stock is also treated as a capital loss. Bruce's AGI is calculated as follows:Salary: $80,000Gain on sale of § 1244 stock: $20,000Loss on sale of § 1244 stock: ($75,000)Worthless stock: ($15,000)AGI: $27,000

Bruce, Who Is Single, Had the Following Items for the Current