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Maximizing the tuition deduction, Whose office is it?

I have the following assignment that I need help completing:

Maximizing the Tuition Deduction

Blake maintain a household that include his daughter bianca who is 23 years old and a full time student. using funds from a savings account she inherited from her aunt, Bianca pays for her $5000 college tuition. For the year, Blake properly claims Bianca as a dependent (under the qualifying child category) and, making use of 222, deducts $4,000 of the tuition. On her own income tax return, Bianca also use 222 to deduct the 1,000 balance of the 5,000 tuition.
- Explain what Blake and Bianca might be trying to accomplish.
- Determine whether or not they have acted properly. Discuss any ethical concerns related to this treatment.

Ethics and Equity: Whose Office Is It?

Gene and Mary are married, and both work at home. Gene is self-employed, while mary is employed. They have set aside 20 percent of the living area of their residence for an office that they both use. On a joint return for the year, the full office in the home expenses are deducted on Gene's schedule C (profit or loss from business), while Mary's form 2106 (employee business expenses) contains no such deduction.
- Discuss what Gene and Mary might be trying to accomplish.
- Evaluate if Gene and Mary acted properly.

Solution Preview

Maximizing the Tuition Deduction

- Explain what Blake and Bianca might be trying to accomplish.
- Determine whether or not they have acted properly. Discuss any ethical concerns related to this treatment.

They're both trying to use the same deduction to receive the tuition deduction credit. First of all, she's 23, so it's likely that she's still an undergraduate in college (as opposed to a graduate student, which would be a different credit.) The American Opportunity Credit would serve them better than the tuition deduction credit. I am not sure why they're referring to 222. The forms used are either the 8917 or 8863, depending on the credit taken. Bianca can't claim $1,000 of the credit. It will be rejected as soon as the IRS receives ...

Solution Summary

The solution discusses both cases presented below from the ethics sections of Federal Taxation. Both scenarios are fully addressed.

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