Question

Fatima had the following income and losses during the current year: Wages $30,000 Share of partnership...

Fatima had the following income and losses during the current year: Wages $30,000 Share of partnership income 10,000 Unemployment compensation 8,000 Group life insurance 40,000 Prize won from a charity raffle 10,000 2,000 What is Fatima’s adjusted gross income? A) $30,000 B) $40,000 C) $50,000 D) $90,000

Homework Answers

Answer #1

According to U.S. income tax system, adjusted gross income (AGI) is calculated by deducting specific deductions from total gross income of an individual. In given case only incomes have been provided, so we can calculate adjusted gross income (AGI) as follows-

Incomes Amount$
Wages $30,000
Share of partnership income $10,000
Unemployment compensation $8,000
Group life insurance* Exempt
Prize won from a charity raffle $2000
Total adjusted gross income $50,000

* According to IRS code Section 79- $50,000 of life insurance coverage in Group life insurance is tax-free or exempt.

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