____ 24. During 2016, Lea had the following transactions: Salary $ 80,000 Intere
ID: 2588236 • Letter: #
Question
____ 24. During 2016, Lea had the following transactions:
Salary
$ 80,000
Interest income on City of Boston bonds
3,000
Damages for personal injury (car accident)
70,000
Punitive damages (same car accident)
90,000
Donation to YMCA
$10,000
Cash dividends from Ford Corp stock
7,000
Contribution to Roth IRA
4,000
Lea’s AGI is:
a.
$166,000.
b.
$176,000.
c.
$167,000.
d.
$177,000.
e.
$247,000.
Salary
$ 80,000
Interest income on City of Boston bonds
3,000
Damages for personal injury (car accident)
70,000
Punitive damages (same car accident)
90,000
Donation to YMCA
$10,000
Cash dividends from Ford Corp stock
7,000
Contribution to Roth IRA
4,000
Explanation / Answer
Answer:
Option D is correct.
AGI = Salary ($80,000) + Punitive damages ($90,000) + Cash dividends ($7,000)
AGI = $177,000
The damages from personal injury and municipal bond interest are nontaxable exclusions.
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