Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. $$\begin{array} { | l | c | }
\hline \text { Salary } & \$ 74,000 \
\hline \text { Business income from Able } & \$ 20,000 \
\hline \text { Business loss from Bensen } & \$ ( 33,000 ) \
\hline
\end{array}$$ If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

Question

Mr. Vernon owns stock in two S corporations, Able Corporation and Benson Inc. This year, Mr. Vernon had the following income and loss items. $$\begin{array} { | l | c | } 
\hline \text { Salary } & \$ 74,000 \
\hline \text { Business income from Able } & \$ 20,000 \
\hline \text { Business loss from Bensen } & \$ ( 33,000 ) \
\hline
\end{array}$$ If Vernon materially participates in Able's business but not in Benson's business, compute his AGI.

Quizplus · Accepted Answer

Mr. Vernon's AGI is calculated by adding his salary and the business income from Able, as he materially participates in it. The loss from Benson cannot be deducted because he does not materially participate in that business. Thus, AGI = $74,000 (salary) + $20,000 (Able income) = $94,000.

Mr Vernon Owns Stock in Two S Corporations, Able Corporation