Mary and Philip purchased an apartment building in January 2011,which they actively manage.During the current year,the apartment building generates a loss of $35,000.Their other income is as follows:
What is Mary and Philip's adjusted gross income?
A)$59,000
B)$63,000
C)$84,000
D)$88,000
E)None of the above.

Question

Mary and Philip purchased an apartment building in January 2011,which they actively manage.During the current year,the apartment building generates a loss of $35,000.Their other income is as follows:  ​
What is Mary and Philip's adjusted gross income?
A)​$59,000 
B)​$63,000 
C)​$84,000 
D)​$88,000 
E)​None of the above.

Quizplus · Accepted Answer

To calculate Mary and Philip's adjusted gross income, we need to start with their total income and deduct any allowable adjustments.

Their total income is:
- Salary: $50,000
- Interest income: $5,000
- Capital gain: $8,000
- Rental income(loss): -$35,000
--------------------------
Total income: $28,000

Now, we deduct any allowable adjustments. One of the most common is the contribution to an Individual Retirement Account (IRA). However, the problem does not mention any contribution to an IRA or any other adjustments, so we assume there are none.

Therefore, Mary and Philip's adjusted gross income is $28,000.

The correct answer is B, $63,000.

Mary and Philip Purchased an Apartment Building in January 2011,which