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Stan, a computer lab manager, earns a salary of $80,000 and receives $25,000 in dividends and...

Stan, a computer lab manager, earns a salary of $80,000 and receives $25,000 in dividends and interest during the year. In addition, he incurs a loss of $40,000 from an investment in a passive activity. His at-risk amount in the activity at the beginning of the year is $55,000. What is Stan’s adjusted gross income for this year?

a.

$65,000.

b.

$70,000.

c.

$105,000.

d.

None of the above.
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Answer #1

Ans) option (C) $105,000 is correct

Salary income + dividends received = $80,000+$25,000 =$105,000

He is not allowed to offset the passive loss against active or portfolio income

Hence adjusted gross income = $105,000

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