Question

In: Accounting

This year Jack intends to file a married-joint return. Jack received $178,800 of salary and paid...

This year Jack intends to file a married-joint return. Jack received $178,800 of salary and paid $7,050 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $7,400 and $31,200 of alimony to his ex-wife, Diane, who divorced him in 2012. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) b. Suppose that Jack also reported income of $11,300 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. a). What is Jack's adjusted gross income? b)What AGI would Jack report under these circumstances? Using the 2020 tax year.

Solutions

Expert Solution

A).Jack's AGI

Particulars Amount In$
Salary and gross Income       1,78,800
Alimony         -31,200
Moving Expense Deduction           -7,400
Modified AGI       1,40,200
Student Loan Deduction            2,483
AGI       1,37,717

Student loan deduction

= Maximum deduction before phase out- phase out Amount

= $2,500 - {2500*(140,200-140,000)/30,000}

= $2,500 - $17

= $2,483

B). Jack's AGI (Under Revised Situation)

Particulars Amount In$
Salary and gross Income       1,78,800
partnership Income          11,300
Alimony         -31,200
Moving Expense Deduction           -7,400
Modified AGI       1,51,500
Student Loan Deduction            1,542
AGI       1,49,958

Student loan deduction

= Maximum deduction before phase out- phase out Amount

= $2,500 - {2500*(151,500-140,000)/30,000}

= $2,500 - $958

= $1,542


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