Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. 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.  If Ms. Watts materially participates in the business of both corporations, compute her AGI.

Quizplus · Accepted Answer

- Ms. Watts had wages of $82,000 and taxable interest income of $1,500 for a total of $83,500 in income from other sources. 
- She also had a $20,000 loss from MKP Corporation where she materially participates, resulting in an AGI of $63,500. 
- However, she had a $20,000 income from Reynolds Inc. where she also materially participates, bringing her AGI to $83,500 + $20,000 - $20,000 = $127,500. 
- Additionally, she had $200 in capital gain income, resulting in an AGI of $127,700.

Ms Watts Owns Stock in Two S Corporations, MKP Corporation