Hiroko,a single taxpayer,has wage income of $80,000.In addition,she has $5,000 in long-term capital losses,$4,000 in long-term capital gains,and $4,000 in short-term capital gains.What is Hiroko's AGI for 2017?

Question

Quizplus · Accepted Answer

First, we need to calculate Hiroko's net capital loss by subtracting her long-term capital losses from her long-term capital gains: 
$4,000 (long-term capital gains) - $5,000 (long-term capital losses) = -$1,000 (net long-term capital loss).

Next, we can calculate her total capital gain by adding her net long-term capital loss to her short-term capital gains: 
-$1,000 (net long-term capital loss) + $4,000 (short-term capital gains) = $3,000 (total capital gain).

Finally, we can calculate her AGI by subtracting her total capital gain from her wage income: 
$80,000 (wage income) - $3,000 (total capital gain) = $77,000 (AGI).

However, since the maximum capital loss that can be deducted in a single tax year is $3,000, Hiroko can only use $3,000 of her capital loss to offset her ordinary income. Therefore, her AGI is: 
$80,000 (wage income) - $3,000 (capital loss deduction) = $77,000 (AGI).

Answer choice C is the correct answer.

Hiroko,a Single Taxpayer,has Wage Income of $80,000