1 a) A is single and has the following items of income and expense:

Salary $250,000

Bank interest income $3,000

Interest income on a bond issued by California $2,500

Contributions to an IRA (non- Roth) $1,200

State and local income taxes $15,000

Gambling losses $7,500

Compute As taxable income for the year. Please explain how you found each amount.

1 b) Assume B has the same items of income and expense as in problem 1a above, with the following difference. Instead of having $15,000 of state and local income taxes B only has state and local income taxes of $10,000, but B has deductible business expenses of $5,000. While the total amount of net income is the same for A and B, do they have the same amount of taxable income?

1 c) Assume A is single, and in 2020 has salary income of $12,000 and has had federal income taxes withheld on her income of $700. Is A required to file an income tax return for the year 2020? Why or why not? If A is not required to file a tax return why might she want to?