Lois, who is single, received $9,000 of Social Security benefits.She also received $25,000 from dividends, interest, and her employer's pension plan.If Lois sells a capital asset that produces a $1,000 recognized loss, Lois's taxable income will decrease by more than $1,000.

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Social Security benefits and income from dividends, interest, and pension plans are all considered taxable income. Therefore, adding them together gives Lois a total taxable income. Selling a capital asset with a recognized loss will decrease her taxable income by the amount of the loss, which in this case is $1,000. However, since Lois's taxable income was already high due to her Social Security benefits and other sources of income, the loss may push her into a lower tax bracket or make her eligible for certain deductions or credits that she wasn't eligible for before, resulting in a greater reduction in her tax liability than just the $1,000 loss.

Lois, Who Is Single, Received $9,000 of Social Security Benefits