During 2016,Marvin had the following transactions:
Salary
$50,000
Bank loan (proceeds used to buy personal auto)
10,000
Alimony paid
12,000
Child support paid
6,000
Gift from aunt
20,000
Marvin's AGI is:
A)$32,000.
B)$38,000.
C)$44,000.
D)$56,000.
E)$64,000.

Question

Quizplus · Accepted Answer

Marvin's AGI is calculated by adding his salary of $50,000 with the gift from his aunt of $20,000. His AGI is $70,000. However, the bank loan proceeds used to buy a personal auto are not deductible as they are personal expenses. The alimony paid of $12,000 and child support paid of $6,000 are also not deductible. Therefore, Marvin's taxable income is $50,000 ($70,000 - $10,000 for the non-deductible bank loan). Thus, Marvin's AGI is $38,000 ($50,000 + $20,000 - $10,000 - $12,000 - $6,000 = $38,000).

During 2016,Marvin Had the Following Transactions