Question
Through November, Tex has received gross income of $90,000. For December, Tex is considering whether to accept one more work engagement for the year. Engagement
Through November, Tex has received gross income of $90,000. For December, Tex is considering whether to accept one more work engagement for the year. Engagement 1 will generate $8,220 of revenue at a cost of $4,300, which is deductible for AGI. In contrast, engagement 2 will generate $8,220 of revenue at a cost of $3,920, 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
b. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $4,660 of itemized deductions other than those generated by engagement 2.
c. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $8,040 of itemized deductions other than those generated by engagement 2.
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