Question - Tonya had the following items for last year:
Salary $40,000
Short-term capital gain 12,000
Non-business 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's bad debt 10,000
Determine Tonya's adjusted gross income for the current year.
I know that the income is limited to the tax benefit from the prior year, but I am unsure of the tax benefit of the prior year, whether you would use all the of $10,000 or if it's limited to the $3,000 capital loss limit.
The test is due tonight, so quick answer please!!!