Question

During 2018, Claudia had a down year in her business making ice cream pies. 2018 was an incredibly cold year due to reverse climate change and not very many people wanted to buy ice cream pies. Her net loss from the business is $85,000. Because business was so bad, she had to take a part-time job at Dairy Queen which paid her gross wages of $26,000 during the year. She also had some interest income of $1,000, dividends of $2,500 and net income from a rental property of $24,000. Her AGI for 2017 on her originally filed return, when business was good due to regular climate change, was $97,500. What will be Claudia’s AGI for 2017 and 2018 after she finishes her 2018 return filings?

$62,500 and $53,500

$97,500 and $53,500

$97,500 and ($31,500)

$62,500 and ($31,500)

Answer 1

C) $ 97,500 and ( $ 31,500)

Explanation : Wages, interest income , dividend income, rental income are included in adjusted gross income.

So, Her AGI for 2017 is $ 97,500 ( given)

Her, AGI for 2818 is calculated under :

Net loss from the business	( $ 85,000)
Wages income	$ 26,000
Interest income	$ 1,000
Dividend income	$ 2,500
Rental income	$ 24,000
Adjusted gross income =	( $ 31,500)