Question

In: Accounting

This year Jack intends to file a married-joint return with two dependents. Jack received $173,460 of...

This year Jack intends to file a married-joint return with two dependents. Jack received $173,460 of salary and paid $7,850 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid qualified moving expenses of $8,350 and $30,100 of alimony. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) b. Suppose that Jack also reported income of $8,850 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? Again, assume that Jack will opt to treat tax items in a manner to minimize his AGI.

Solutions

Expert Solution

Compute adjusted gross income as follows:

Particulars Amount
Salary $173,460
Partnership income $8,850
Less: Alimony paid ($30,100)
Less: Qalified moving Expenses ($8,350)
Modified AGI $143,860
Less: Student loan interest deduction ($1,762)
Adjusted Gross Income (AGI) $142,098
Note: Deductible amount of student loan interest
Particulars Amount
Maximum deduction before phase-out $2,500
Phase out $2,500 × (($143,860 − $135,000) ÷ $30,000) ($738)
Student loan interest deduction $1,762

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