Trevor is a single individual who is a cash-method calerday-year taxpayer. For each of the next 2 years (year 1 and year 2). Trevor expects to report AGI of $80,000, contribute $3,500 to charity, and pay $2,500 in state income taxes.

a. Estimate Trevor's taxable income for year 1 and year 2 using the 2016 amounts for the standard deduction and personal exemption for both years.

Year 1: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

Year 2: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

b. Now assume that Trevor combines his anticipated charitable contributions for the next 2 years and makes the combined contributions for the next 2 years and makes the combined contribution in December of year 1. Estimate Trevor's taxable income for each of the next 2 years using the 2016 amounts for the standard deduction and personal exemption. Reconcile the total taxable income to your solution to part (a).

Year 1: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

Year 2: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

c. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will each cost $4,000 annally ($8,000 in total annually). Estimate Trevor's taxable income for year 1 and year 2 using the 2016 amounts for the standard deduction and personal exemption and also assuming Trevor makes the charitable contribution of $3,500 and state tax payments of $2,500 in each year.

Year 1: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

Year 2: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

d. Assume that Trevor makes the charitable contribution for year 2 and pays the real estate taxes for year 2 in December of year 1. Estimate Trevor's taxable income for year 1 and year 2 using the 2016 amounts for the standard deduction and personal exemption. Reconcile the total taxable income to your solution to part (c) above.

Year 1: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

Year 2: What is the AGI, Itemized deductions, standard deduction, personal exemption, taxable income

e. Explain the conditions in which the bunching strategy in part (d) will generate tax savings for Trevor.