Matteo, who is single and has no dependents, was planning on spending the weekend repairing his car. On Friday, Matteos employer called and offered him $425 in overtime pay if he would agree to work over the weekend. Matteo could get his car repaired over the weekend at Autofix for $306. If Matteo works over the weekend, he will have to pay the $306 to have his car repaired, but he will earn $425. Assume Matteo pays tax at a flat 15 percent rate.

a-1.	Considering monetary considerations only, should Matteo work or repair the car if the $306 he must pay to have his car fixed is not deductible?

	Work
	Repair

a-2.	Given the answer in a-1 above, by how much is Matteo better or worse off?

b-1.	Considering monetary considerations only, should Matteo work or repair the car if the $306 he must pay to have his car fixed is deductible for AGI?

	Work
	Repair

Betteroff/Worse off __________

b-2.

Given the answer in b-1 above, by how much is Matteo better or worse off?

Betteroff/Worse off ____________

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couples joint year 2 tax return and each spouses separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewellas separate year 3 tax return understated Crewellas self-employment income causing the joint return year 2 tax liability to be understated by $8,000 and Crewellas year 3 separate return tax liability to be understated by $6,500. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)

a.	What amount of tax can the IRS require Jasper to pay for the Dahvills year 2 joint return? Amount of Tax_________

b.	What amount of tax can the IRS require Jasper to pay for Crewellas year 3 separate tax return?
	Amount of Tax ______________