Question

This year Jack intends to file a married-joint return. Jack received $173,400 of salary and paid $8,600 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $4,550 and $35,100 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.)

Suppose that Jack also reported income of $10,900 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances?

Answer 1

1) What is Jack's adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.

Jack modified AGI without adjustment of education loan interest is $146,200 which is less than $160,000 limit so he is allowed to deduct loan interest part maximum is $2,500.

Deduvtable loan interest is ($2,500 - $2,500 x [($146,200 - $130,000) / $30,000]

= $1,150

Salary & gross income	183,800
Less: Alimony	(29,000)
Moving expense deduction	(8,600)
Modified AGI	146,200
Student loan deduction	(1,150)
AGI	145,050

Q2.

Jack modified AGI without adjustment of education loan interest is $151,350 which is less than $160,000 limit so he is allowed to deduct loan interest part maximum is $2,500.

Deduvtable loan interest is ($2,500 - $2,500 x [($151,350 - $130,000) / $30,000]

= $721

Salary & gross income	183,800
Partnership income	5,150
Less: Alimony	(29,000)
Moving expense deduction	(8,600)
Modified AGI	151,350
Student loan deduction	(721)
AGI