Review Examples 50 and 52 in the text. In both examples, the taxpayer’s AGI is $129,400 even though in Example 52 there is $700 of nonrecaptured § 1231 loss from 2015. Explain why the two AGI amounts are the same.

Example 50:

During 2016, Ross had $125,000 of AGI before considering the following recognized gains and losses:

Ross had no net § 1231 losses in tax years before 2016. 

Example 52:

Assume the same facts as in Example 50, except that Ross has a $700 nonrecaptured net § 1231 loss from 2015.