Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me answer B and D. Thank you! Data are given below on the adjusted gross income x and the amount of itemized deductions

image text in transcribedPlease help me answer B and D. Thank you!

Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation -4.68 + .16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52.5 thousand is $13.08 thousand Reasonable Amount of Adjusted Gross Income ($1000s) Itemized Deductions ($1000s) 27 32 48 65 85 120 9.6 9.6 10.1 11.1 13.5 17.7 25.5 In the questions that follow, enter the dollar amounts requested. For example, if the regression results provide a value of 11.74 thousand, enter 11,740 as the dollar amount in the box. Use Table 1 of Appendix B a. Develop a 95% confidence interval for the amount of total itemized deductions for all taxpayers with an adjusted gross income of $52,500 (to the nearest whole number) 1173514425 b. Develop a g5% prediction interval for the a ount of total itemized deductions for a particular taxpayer with an adjusted gross income of52,500 (to the nearest whole nu ber) C. If the particular taxpayer referred to in part (b) claimed total itemized deductions of $20,400, would the IRS agent's request for an audit appear to be justified? Yes, because the deduction is larger than expected d. Use your answer to part (b) to give the IRS agent a guideline as to the amount of itemized deductions that would suggest an audit for a taxpayer with an adjusted gross income of $52,500 Any deductions exceeding the upper limit of 10588 could suggest an audit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Management

Authors: Jeff Madura

7th Edition

0324071744, 978-0324071740

More Books

Students also viewed these Finance questions

Question

Is there administrative support?

Answered: 1 week ago