Adjusted Gross Income. Amir, who is single, retired from his job this year. He r

Question

Adjusted Gross Income. Amir, who is single, retired from his job this year. He received a
salary of $25,000 for the portion of the year that he worked, tax-exempt interest of
$3,000, and dividends from domestic corporations of $2,700. On September 1, he began
receiving monthly pension payments of $1,000 and Social Security payments of $600.
Assume an exclusion ratio of 40% for the pension. Amir owns a duplex that he rents to
others. He received rent of $12,000 and incurred $17,000 of expenses related to the
duplex. He continued to actively manage the property after he retired from his job.
Compute Amir’s adjusted gross income.

Explanation / Answer

Salary 25000 dividend income 2700 60% of pension taxed 600 85% of social security 510 Less: remainder of rental loss (5000) AGI 23810 Amir's AGI is 23,810. Tax exempt interest is not included in AGI. Because Amir actively participates in his rental activity, he can deduct the remainder of his rental expenses after they have been used to offset the rental income (12,000 - 17,000 = -5000), to offset non passive income, such as his salary. 40% of his pension is exempt, so only 60% is taxed. The maximum amount of social security that can be taxed is 85%.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.