Question

In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Calculate the following amounts for Lou: a. Adjusted gross income $b. Standard deduction $c. Exemption $d. Taxable income

Answer 1

Answer: a. $52,300 b. $12,200 c. 0 d. $40,100

Explanation:

a. Given according to the IRS regulations of loss on investment (up to $3000)

Adjusted gross income: Salary received  + Interest income received + dividend income received - loss on investment based on IRS regulations

= 53300 + 1600 + 400 - 3000

= $52,300 (Adjusted gross income)

b. Based on 2019 IRS increased filing status for Single individuals, The Standard deduction amount is $12,200

c. According to the 2019 IRS announcements, There are no personal exemption amount. This was set to zero (0) under the Tax Cuts and Jobs Act.

d. Going by the simple formula of:

Taxable Income = Adjusted Gross Income - Exemption - Standard Deduction

= 52300 - 0 - 12200

= $40,100 (Taxable Income)

I hope this helps.