Nancy Reports the Following Income and Loss in the Current

question 33

Multiple Choice

Nancy reports the following income and loss in the current year. $$\begin{array} { | l | r | } \hline \text { Salary } & \$ 60,000 \\\hline \text { Income from activity A } & 18,000 \\\hline \text { Loss from activity B } & ( 9,000 ) \\\hline \text { Loss from activity C } & ( 13,000 ) \\\hline\end{array}$$ All three activities are passive activities with respect to Nancy. Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years. During the year, Nancy sells activity C and realizes a $15,000 taxable gain. What is Nancy's AGI as a result of these transactions?

• A) $50,000
• B) $55,000
• C) $64,000
• D) $71,000

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Definitions:

Retained Earnings

Retained earnings represent the portion of a company's profit that is retained within the business rather than distributed to shareholders as dividends, often used for reinvestment.

Dividend

A payment made by a corporation to its shareholders, usually in the form of cash or stock, from its earnings.

Loss

The reduction in the financial valuation of an investment, or when expenses exceed the income or total amount invested.

Net Capital Spending

The total spending on fixed assets minus the proceeds from the sale of fixed assets.