Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. $$\begin{array} { | l | c | }
\hline \text { Salary } & \$ 113,700 \
\hline \text { Business income from MKP } & \$ 42,000 \
\hline \text { Business loss from Reynolds } & \$ ( 28,000 ) \
\hline
\end{array}$$ If Ms. Watts materially participates in the business of both corporations, compute her AGI.

Question

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. $$\begin{array} { | l | c | } 
\hline \text { Salary } & \$ 113,700 \
\hline \text { Business income from MKP } & \$ 42,000 \
\hline \text { Business loss from Reynolds } & \$ ( 28,000 ) \
\hline
\end{array}$$ If Ms. Watts materially participates in the business of both corporations, compute her AGI.

Quizplus · Accepted Answer

First, we calculate Ms. Watts' income from the S corporations:

MKP income: $42,000

Reynolds loss: ($28,000)

Next, we add this to her salary:

$113,700 + $42,000 - $28,000 = $127,700

Therefore, her AGI is $127,700. Choice C is the correct answer.

Ms Watts Owns Stock in Two S Corporations, MKP Corporation