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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.