Question

John files a return as a single taxpayer. In 2019, he had the following items: ∙ Salary of $30,000. ∙ Loss of $63,000 on the sale of Section 1244 stock acquired two years ago. ∙ Interest income of $8,000. In 2020, John again files a return as a single taxpayer and had the following items: Salary of $114,000 Loss of $55,000 on the sale of Section 1244 stock acquired three years ago. Capital gain of $22,000 on the sale of publicly traded stock purchased one year ago Determine John’s AGI for 2019 and 2020 (assume these are the only transactions, no other carryovers etc...) a. $0 and $56,000 b. $0 and $55,000 c. $8,000 and $64,00 d. $38,000 and $64,000 e. None of a through d is correct

Answer 1

Year 2019
Salary	30000
Interest Income	8000
Ordinary loss (§ 1244 ordinary loss)	-50000
Long-term capital loss (limited to $0)*	0
AGI	-12000
$13,000 ($63,000 - $50,000) is long-term capital loss. Of this amount, no amount can be used because there is no ordinary income. $13,000 ($13,000 - $0) will be carried forward.
Year 2020
Salary	114000
Ordinary loss (§ 1244 ordinary loss)	-50000
Loss Carried Forward	-13000
Long term capital gain = 22000 -13000 -5000	4000
AGI	55000
b. $0 and $55,000 is correct