Through November, Tex has received gross income of $52,500. For December, Tex is considering whether to accept one more work engagement for the year. Engagement 1 will generate $7,450 of revenue at a cost of $3,550, which is deductible for AGI. In contrast, engagement 2 will generate $7,450 of revenue at a cost of $3,900, which is deductible as an itemized deduction. Tex files as a single taxpayer. a. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2.

Assume he has no itemized deductions other than those generated by engagement 2. Description Engagement 1 Engagement 2 (1) Gross income before new work engagement $52,500 $52,500 (2) Income from engagement 7,450 7,450 (3) Additional for AGI deduction (3,550) 0 (4) Adjusted gross income (5) Greater of itemized deductions or standard deduction (6) Personal exemption Taxable income

b. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $5,260 of itemized deductions other than those generated by engagement 2.

	Description	Engagement 1	Engagement 2
(1)	Gross income before new work engagement
(2)	Income from engagement
(3)	Additional for AGI deduction
(4)	Adjusted gross income
(5)
(6)	Personal exemption
	Taxable income

c. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $10,400 of itemized deductions other than those generated by engagement 2.

Engagement 1Engagement 2(1)Gross income before new work engagement(2)Income from engagement(3)Additional for AGI deduction(4)Adjusted gross income(5)(6)Personal exemptionTaxable income