Roland Carlow, age 21, is a full-time student at Morgan State University and a candidate for...

Roland Carlow, age 21, is a full-time student at Morgan State University and a candidate for a bachelor’s degree. During 2019, Roland received the following payments:

Private scholarship for tuition $9,600

Loan from financial aid office $7,200

Cash withdrawn from a qualified tuition program to pay tuition $10,500

Cash dividends on qualified investments $185

Cash prize award in contest $1,400

What is Roland’s adjusted gross income?

Solutions

Expert Solution

Calculation of Roland's adjusted gross income:

1. Private scholarship from for tution ......................................................9600

(since this is not supported or funded by government but a private scholarship it will be added to gross income)

2. Loan from financial aid office .............................................................7200

(any financial help is a money received by you in the year hence added in gross income and later shall be taken as deduction )

3. Cash withdrawn from a qualified tuition program to pay tuition..... 10,500

( this shall be added in the gross income and later deducted)

4.Cash dividends on qualified investments............................................... 185

(income from any sources or such business income form part of the gross income)

5.Cash prize award in contest................................................................. 1,400

(since the student is not a minor therefore if he receives any windfall gains or cashprize or any monetary reward which are irregular in nature shall be taxable inthe hands of him )

therefore total gross income of ronal shall be=28885

Deductions =

1.dividends would have already be taxed in the hands of the company therefore to ignore double taxation we reduce 185/-

2. cash is withdrawn form a qualified tution program which is approved basically hence shall be deducted=10500

therefore total ronalds adjusted gross income would be= (9600+7200+10500+185+1400-185-10500=18200)

18200

ekkarill92 answered 1 year ago

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