Virginia is a cash-basis, calendar-year taxpayer. Her salary is $20,000, and she is single. She plans to purchase a residence in 2018. She anticipates her property taxes and interest will total $7,200. Each year, Virginia contributes approximately $1,000 to charity. Her other itemized deductions total approximately $800. For purposes of this problem, assume that 2018 tax rates, exemptions, and standard deductions are the same as for 2017.
a. What will her gross tax be in 2017 and 2018 if she contributes $1,000 to charity in each year?
b. What will her gross tax be in 2017 and 2018 if she contributes $2,000 to charity in 2017 but makes no contribution in 2018?
c. What will her gross tax be in 2017 and 2018 if she makes no contribution in 2017 but contributes $2,000 in 2018?
d. Alternative c results in a lower tax than either a or b. Why?