Question

4. Carrie earned a salary of $70,000 in the current year. She sold common stock she had owned for eight months for a $2,000 loss and she sold her jet ski for a loss of $l,800. Carrie also sold a painting acquired ten years ago for a gain of $8,000. Whatis Carrie's adjusted gross income for the year?

a. $78,000

b. $76,000

c. $74,200

d. $68,000

Answer 1

Answer: b. $76,000

.

Usually, a property held for personal use is also considered as a capital asset

Gain from a sale of property held for personal use is a capital gain and this gain should be included in the calculation of adjusted gross income.

However, a loss from a sale of property held for personal use is not deductible.

.

Jet Ski is a property held for personal use. The loss on sale of Jet Ski is not deductible.

.

Adjusted gross income = $70,000 + $8,000 - $2,000 = $76,000