Through November, Tex has received gross income of $77,500. For December, Tex is considering whether to accept one more work engagement for the year. Engagement 1 will generate $7,490 of revenue at a cost of $4,050, which is deductible for AGI. In contrast, engagement 2 will generate $7,490 of revenue at a cost of $3,440, which is deductible as an itemized deduction. Tex files as a single taxpayer
a. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has no itemized deductions other than those generated by engagement 2.
b. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $4,640 of itemized deductions other than those generated by engagement 2.
c. Calculate Tex's taxable income assuming he chooses engagement 1 and assuming he chooses engagement 2. Assume he has $8,200 of itemized deductions other than those generated by engagement 2.
