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Scenario $1$: Substantially Equal Periodic Payments $($SEPP$)$

Michael retired at age $53$ and began taking distributions from his Traditional IRA using the SEPP exception $(72($t$)$ calculations$).$ His annual distribution is $$35,000.$

Wages: $$15,000$

Interest and Dividend Income: $$800$

Itemized Deductions: $$12,000$

Allowable deduction for self$-$employment tax: None

Calculate:

The portion of the distribution subject to the $10\%$ early withdrawal penalty.

AGI, Taxable Income, and Total Tax Liability.