chapter 4 tax accounting 425173

Through November, Tex has received gross income of $265,000. For December, Tex is considering whether to accept one more work engagement for the year. Engagement 1 will generate $13,800 of revenue at a cost of $5,200, which is deductible for AGI. In contrast, engagement 2 will generate $13,800 of revenue at a cost of $2,900, 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 engagement 2 separately. Assume he has no itemized deductions other than those generated by engagement 2.

Engagement 1 Engagement 2
Taxable income $ $

b.
Calculate Tex’s taxable income assuming he chooses engagement 1 and engagement 2 separately. Assume he has $5,610 of itemized deductions other than those generated by engagement 2.

Engagement 1 Engagement 2
Taxable income $ $

c.
Calculate Tex’s taxable income assuming he chooses engagement 1 and engagement 2 separately. Assume he has $9,200 of itemized deductions other than those generated by engagement 2.

Engagement 1 Engagement 2
Taxable income $ $<?xml:namespace prefix = o ns = “urn:schemas microsoft com:office:office” />