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PROBLEM I6-34: Calculate taxable income for Kent

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For vs. from AGI. During the current year, Kent, a single taxpayer, reports the following
items of income and expense:

Salary $170,000
Dividends from Alta Corporation 800
Interest income from a savings account 1,500
Rental income from a small apartment he owns 8,000

Medical 6,000
Interest on a principal residence 7,000
Real property taxes on the principal residence 4,300
Charitable contributions 4,000
Casualty loss-personal 6,100
Miscellaneous itemized deductions 1,200
Loss from the sale of Delta Corporation stock
(held for two years) 2,000
Expenses incurred on the rental apartment:
Maintenance 500
Property taxes 1,000
Utilities 2,400
Depreciation 1,700
Insurance 800
Alimony payments to former wife 10,000

Assuming all of these items are deductible and that the amounts are before any limitations,
what is Kent's taxable income for the year?

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Solution Summary

The solution shows all the calculations to arrive at taxable income together with explanation for limitations or non-deductible items.