Answer :
Final answer:
Adjusted gross income (AGI) includes d) Rents, minus vacancies, minus credit losses, minus expenses, plus other income. AGI is distinct from taxable income and accounts for various sources of income. Understanding the components of AGI is crucial for accurate tax filing and comprehension of personal and disposable income.
Explanation:
The correct answer for the student's question is: d) Rents, minus vacancies, minus credit losses, minus expenses, plus other income. This formula comprehensively accounts for the actual income generated from rental properties, which becomes a part of adjusted gross income (AGI). When calculating AGI, all forms of income are considered, including wages, interest income, and unemployment compensation, as well as rental income after adjusting for vacancies, credit losses, and expenses. It's important to note that AGI is different from taxable income, which is the income after all deductions and exemptions have been applied.
While national income includes all income earned in the form of wages, profits, rent, and profit income, personal income is that portion of GDP that finds its way into households, closely related to AGI on tax forms. Disposable income is the remaining amount after taxes and transfers.
The determination of AGI is a foundational concept in understanding income taxation and its various components such as rents, wages, and other types of income. This also applies when considering basic concepts of taxation and is key to filing income tax forms, whether the straightforward 1040EZ or more complex forms requiring itemization.
