Through November, Cameron has received gross income of $55,000. For December, Cameron is considering whether to accept one more work engagement for the year. Engagement 1 will generate $8,020 of revenue at a cost to Cameron of $3,600, which is deductible for AGI. In contrast, engagement 2 will generate $7,250 of qualified business income (QBI), which is eligible for the 20 percent QBI deduction. Cameron files as a single taxpayer, and he did not contribute to charity during the year. Calculate Cameron's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has no itemized deductions. X Answer is complete but not entirely correct. 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) Greater of itemized deductions or standard deduction (6) Deduction for QBI Taxable income ✔ $ 55,000 $ 8,020 (3,600) ✔ 59,420✔ $ (12,400) X 0✔ 47,020 $ 55,000✔ 7,250✔ 0✓ 62,250✔ (12,400) X (1,450) 48,400

Through November, Cameron has received gross income of $55,000. For December, Cameron is considering whether to accept one more work engagement for the year. Engagement 1 will generate $8,020 of revenue at a cost to Cameron of $3,600, which is deductible for AGI. In contrast, engagement 2 will generate $7,250 of qualified business income (QBI), which is eligible for the 20 percent QBI deduction. Cameron files as a single taxpayer, and he did not contribute to charity during the year. Calculate Cameron's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has no itemized deductions. X Answer is complete but not entirely correct. 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) Greater of itemized deductions or standard deduction (6) Deduction for QBI Taxable income ✔ $ 55,000 $ 8,020 (3,600) ✔ 59,420✔ $ (12,400) X 0✔ 47,020 $ 55,000✔ 7,250✔ 0✓ 62,250✔ (12,400) X (1,450) 48,400

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 79APSA

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