For the current year, Susan had salary income of $20,000. In addition, she reported the following capital transactions during the year: $$\begin{array} { l r }
\text { Long-term capital gain } & \$ 7,000 \
\text { Short-term capital gain } & 3,000 \
\text { Long-term capital loss } & ( 2,000 ) \
\text { Short-term capital loss } & ( 5,000 )
\end{array}$$ There were no other items includable in her gross income. What is the amount of her adjusted gross income for the current year?

Question

For the current year, Susan had salary income of $20,000. In addition, she reported the following capital transactions during the year: $$\begin{array} { l r } 
\text { Long-term capital gain } & \$ 7,000 \
\text { Short-term capital gain } & 3,000 \
\text { Long-term capital loss } & ( 2,000 ) \
\text { Short-term capital loss } & ( 5,000 )
\end{array}$$ There were no other items includable in her gross income. What is the amount of her adjusted gross income for the current year?

Quizplus · Accepted Answer

Susan's adjusted gross income is calculated by adding her salary income to her net capital gains. The net capital gains are calculated by offsetting the capital gains and losses: Long-term capital gain ($7,000) - Long-term capital loss ($2,000) = $5,000 net long-term gain; Short-term capital gain ($3,000) - Short-term capital loss ($5,000) = ($2,000) net short-term loss. The net capital gain is $5,000 - $2,000 = $3,000. Therefore, her adjusted gross income is $20,000 (salary) + $3,000 (net capital gain) = $23,000.

For the Current Year, Susan Had Salary Income of $20,000