Question

This year Jack intends to file a married-joint return. Jack received $178,800 of salary, and paid $7,050 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $7,400 and $31,200 of alimony to his ex-wife, Diane, who divorced him in 2012. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

a. What is Jack's adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.
b. Suppose that Jack also reported income of $9,700 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances? Again, assume that Jack will opt to treat tax items in a manner to minimize his AGI. What's Jack's AGI?

Answer 1

To calculate Jack's adjusted gross income (AGI), we subtract certain deductions and exemptions from his total income. For a married-joint return, Jack's AGI is $133,150. If Jack also reported additional income from a partnership, his AGI would be $142,850.

Step-by-step explanation:

To calculate Jack's adjusted gross income (AGI), we need to subtract certain deductions and exemptions from his total income. The key components for calculating AGI are salaries, interest on loans used for qualified tuition costs, moving expenses, and alimony paid. We need to consider that Jack is filing a married-joint return.

a. To calculate Jack's AGI, we start with his total income: $178,800. Then, we subtract the following items:

• Interest on loans for qualified tuition costs: $7,050
• Moving expenses: $7,400
• Alimony paid: $31,200

So, Jack's AGI is calculated as follows: $178,800 - $7,050 - $7,400 - $31,200 = $133,150.

b. If Jack also reported income of $9,700 from a half share of profits from a partnership, then this income needs to be added to his total income before calculating AGI. Therefore, his total income would be: $178,800 + $9,700 = $188,500. We can then follow the same steps as in part a to calculate Jack's AGI. So, Jack's AGI with this additional income would be: $188,500 - $7,050 - $7,400 - $31,200 = $142,850.