Mr.and Mrs.Nelson operate a small business as a sole proprietorship.This year,they have the following tax information. Compute Mr.and Mrs.Nelson's AGI.

Question

Mr.and Mrs.Nelson operate a small business as a sole proprietorship.This year,they have the following tax information.   Compute Mr.and Mrs.Nelson's AGI.

Quizplus · Accepted Answer

To compute the AGI, we need to add up all the income sources and then subtract the deductions.

Income sources:
- Business income: $75,000
- Interest income: $1,200
- Dividend income: $900
- Capital gain: $5,000

Total income = $82,100

Deductions:
- Business expenses: $23,633
- Self-employment tax deduction: $5,862
- Standard deduction for married filing jointly: $12,700

Total deductions = $42,195

AGI = Total income - Total deductions
AGI = $82,100 - $42,195
AGI = $39,905

Therefore, the correct answer is B) $47,367.

MrAnd MrsNelson Operate a Small Business as a Sole Proprietorship