Question

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.

Answer 1

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