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
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 55P
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Question
![Problem 4-32 (LO 4-1) (Algo)
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.
Answer is complete but not entirely correct.
Description
Engagement 1
Engagement 2
(1) Gross income before new work engagement
$
55,000
$
(2) Income from engagement
8,020
(3) Additional for AGI deduction
(3,600)
(4) Adjusted gross income
$
59,420 $
(5) Greater of itemized deductions or standard deduction
(6) Deduction for QBI
Taxable income
✓
(12,400)
47,020
*******
0✓
55,000✔
7,250
0✓
62,250✔
(12,400) X
(1,450) ✔
48,400 X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F91a1897c-6376-41f7-9c6e-a56c1adb050a%2F67ab6b54-9a1a-4798-ac8c-affeefb1cb05%2Fzhw1ddf_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 4-32 (LO 4-1) (Algo)
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.
Answer is complete but not entirely correct.
Description
Engagement 1
Engagement 2
(1) Gross income before new work engagement
$
55,000
$
(2) Income from engagement
8,020
(3) Additional for AGI deduction
(3,600)
(4) Adjusted gross income
$
59,420 $
(5) Greater of itemized deductions or standard deduction
(6) Deduction for QBI
Taxable income
✓
(12,400)
47,020
*******
0✓
55,000✔
7,250
0✓
62,250✔
(12,400) X
(1,450) ✔
48,400 X
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