Question

Nell, single and age 38, had the following income and expense items in 2018:

Nonbusiness bad debt	$6,000
Business bad debt	2,000
Nonbusiness long-term capital gain	4,000
Nonbusiness short-term capital loss	3,000
Salary	50,000
Interest income	3,000

Determine Nell’s AGI for 2018.

Nell has an overall capital loss in the amount of $. However, Nell may deduct only
$ this year. Nell's adjusted gross income is $.

Answer 1

Note = short term capital loss can be adjusted against short term capital loss. Also Non buisness bad debt considered as short term cap loss , hence total short term capital loss = (3000+6000) = 5000

Hence net capital loss = Short term capital loss - long term capital gain

= 9000 - 4000 = 5000

However Capital loss allowed to be adjusted only to the extent of 3000 if filing single.

Salary = 50000

ADD Interest income = 3000

LESS business bad debt = (2000)

LESS capital loss = ( 3000)

Adjusted gross income = 48000$