During 2015,Sarah had the following transactions: Salary $ 80,000 Interest income on City of Baltimore bonds 1,000 Damages for personal injury (car accident) 100,000 Punitive damages (same car accident) 200,000 Cash dividends from Chevron Corporation stock 7,000 Sarah's AGI is:
A)$185,000.
B)$187,000.
C)$285,000.
D)$287,000.
E)$387,000.

Question

Quizplus · Accepted Answer

To calculate AGI, we need to add up all income sources except tax-exempt income, and subtract above-the-line deductions (if any). In this case, Sarah's income sources are:
- Salary: $80,000
- Interest income: $1,000
- Damages for personal injury: $100,000 (not tax-exempt, since it's not a gift or inheritance)
- Punitive damages: $200,000 (same)
- Cash dividends: $7,000

Adding these up, we get a total of $388,000. However, we also need to subtract any above-the-line deductions. The problem does not provide any information to suggest that Sarah has any, so we assume there are none. Therefore, her AGI is $388,000 - $1,000 = $287,000. The correct answer is D.

During 2015,Sarah Had the Following Transactions: Salary $ 80,000 Interest