Tuesday, July 12, 2011

Calculating Adjusted Gross Income?

Paul was employed during the first six months of the year and earned a $46,000 salary. During the next 6 months, he collected $4,800 of unemployment compensation, borrowed $6,000 (using his personal residence as collateral) and withdrew $1,000 from his savings account (including $60, interest). His luck was not all bad, for in December he won $800 in the lottery on a $5 ticket. Because of his dire circumstances, Paul's parents loaned his $10,000 (interest-free) on July 1 of the current year, when the Federal rate was 8%. Paul did not repay the loan during the year and used the money for living expenses. Calculate Paul's adjusted gross income for the year.

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