Question

Halal has the following for 2019: $103,000 salary, $5,000 dividend income, $4,000 interest income on the city of San Antonio bonds, a gain of $11,000 on a stock sale, $3,500 traditional IRA contribution, and a $3,000 operating loss on a small sole proprietorship that he owns.

What is Hala’s AGI

Shireen, age 58 and single, has no dependents and an AGI of $50,000 and these  expenses: unreimbursed medical expenses of $1,200,charitable contribution of $5,000, real estate taxes  of $3,500, and residence mortgage interest of $7,000.

For 2019, Shireen’s deductions from AGI is?

	A.	$12,200.
	B.	$15,500.
	C.	$19,700.
	D.	$16,700.
	E.	some other amount.

Answer 1

1. Salary = $103,000

Dividend Income = $5,000

Interest income = $4,000

Capital gain on sale of stock = $11,000

Total Gross Income = $103,000 + $5.000 + $4,000 + $11,000 = $123,000

Traditional IRA contribution = $3,500

Operating loss on proprietorship = $3,000

Hala's AGI = $123,000 - $3,500 - $3,000 = $116,500

2. Shireen’s deductions are as follows:

Unreimbursed medical expenses that exceeds 7.5% of AGI is only allowed as deductions. Shireen's 7.5% of AGI is $3,750, hence unreimbursed medical expenses of $1,200 is not deductible.

Charitable contribution = $5,000

Real estate taxes = $3,500

Residence mortgage interest = $7,000

For 2019, Shireen’s deductions from AGI is = $5,000 + $3,500 + $7,000 = $15,500

Answer is

B.

$15,500.