Question

Use the following information to answer Part (a) and (b)

Charlie, a single taxpayer, has gross income of $115,000.

He has following expenses for 2019:

- Rent for his apartment: $14,400

- Advertising and maintenance expenses for a rental property he owns in the amount of $1,800.

- Moving expenses to change jobs (assume Tyler is not reimbursed for his expenses) :

- Cost to move furniture and home furnishings: $3,600

- House-hunting expenses: $800

- Tyler traveled 200 miles to his new residence in his personal vehicle.

- Groceries and utility expenses: $5,500

- Traditional IRA contributions: $2,500

- Alimony payments made to his ex-wife in the amount of $2,500. The divorce decree was executed on February 14, 2018.

- A property settlement paid to his ex-wife in the amount of $3,000.

Part (a)

What is Charlie's adjusted gross income (AGI) for 2019?

A. $107,700

B. $110,700

C. $108,200

D. $113,200

Part (b)

Which of the following expenses are non-deductible?

A. Rent

B. Moving Expenses

C. Groceries and Utilities

D. Property settlement

E. All of the above

6.2.6

6.2.6

Answer 1

Part (a):

Calculation of adjusted gross income:

Given Gross total Income:                           $ 115,000/-

Less: Advertisement           $ 1800

Less: IRA contribution           $ 2500

Less: Alimony payments      $ 2500

                                                                     $ 6800/-

                                                            _______________

Adjusted Gross Income:                         $ 108,200/-

Option "C".

Part (b):

Option “E” All of the expenses are not deductible.