1. Tonya had the following items for last year: Salary $40,000 Short-term capita
ID: 2373256 • Letter: 1
Question
1. Tonya had the following items for last year:
Salary
$40,000
Short-term capital gain
$12,000
Nonbusiness bad debt
($10,000)
Long-term capital loss
($8,000)
For the current year, Tonya had the following items:
Salary
$45,000
Collection of last year%u2019s bad debt
$12,000
Determine Tonya's adjusted gross income for the current year.
2. Misty owns stock in Violet, Inc., for which her adjusted basis is $75,000. She receives a cash distribution of $52,000 from Violet.
a. What is Misty's adjusted basis for the stock if the distribution is a taxable dividend?
b. What is Misty's adjusted basis for the stock if the distribution is a return of capital?
3. Rachel lives and works in Chicago. She is the regional sales manager for a national fast food chain. Due to unusual developments, she is compelled to work six straight weeks in the St. Louis area. Instead of spending the weekend there, she flies home every Friday night and returns early Monday morning. The cost of coming home for the weekend approximates $500. Had she stayed in St. Louis, deductible meals and lodging would have been $600. How much, if any, may Rachel deduct as to each weekend?
Salary
$40,000
Short-term capital gain
$12,000
Nonbusiness bad debt
($10,000)
Long-term capital loss
($8,000)
Explanation / Answer
Tonya had the following items for last year:
Salary $40,000
Short-term capital gain 12,000
Nonbusiness bad debt (10,000)
Long-term capital loss (5,000)
For the current year, Tonya had the following items:
Salary $45,000
Collection of last year bad debt 10,000
Determine Tonya's adjusted gross income for the current year.
Solution : Computation of the current year Adjusted Gross Income
Particulars
Amount
Salary
$40,000
Short Term Capital Gain
$12,000
Non Business Bad Debt
$(10,000)
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