Mr. and Mrs. Nelson operate a small business as a sole proprietorship. This year, they have the following tax information. $$\begin{array} { | l | r | }
\hline \text { Net profit frorn sole proprietorship } & \$ 50,000 \
\hline \text { Deduction For sE tax } & \$ 3,533 \
\hline \text { Dividends } & \$ 900 \
\hline \text { Net incorne from rental property } & \$ 2,780 \
\hline \text { Loss from lirited partrership } & \$ 6,000 ) \
\hline
\end{array}$$ 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. $$\begin{array} { | l | r | } 
\hline \text { Net profit frorn sole proprietorship } & \$ 50,000 \
\hline \text { Deduction For sE tax } & \$ 3,533 \
\hline \text { Dividends } & \$ 900 \
\hline \text { Net incorne from rental property } & \$ 2,780 \
\hline \text { Loss from lirited partrership } & \$ 6,000 ) \
\hline
\end{array}$$ Compute Mr. and Mrs. Nelson's AGI.

Quizplus · Accepted Answer

To calculate AGI, we need to start with our total income and make adjustments, as follows:

Total Income = (Net profit from sole proprietorship + Net income from rental property + Dividends) - Loss from limited partnership 
Total Income = ($50,000 + $2,780 + $900) - $6,000 = $48,680

Next, we need to subtract the deduction for self-employment tax:

AGI = Total Income - Deduction for SE tax 
AGI = $48,680 - $3,533 = $45,147

Therefore, the correct answer is B.

Mr and Mrs Compute Mr