John Graduates from High School in 2013 and Enrolls in a Private

question 37

Essay

John graduates from high school in 2013 and enrolls in a private college in the fall.His parents pay
$10,000 for his tuition and fees.
a.Assuming John's parents have AGI of $46,000,what is the American Opportunity credit they can claim for John? Explain.
b.Assuming John's parents have AGI of $170,000,what is the American Opportunity credit they can claim for John? Explain.

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Definitions:

Cash Basis

An accounting method where revenues are recognized when received and expenses when paid, contrasting with accrual basis accounting.

Incurred

Costs or expenses that a company has obtained or become responsible for as a result of its operations.

Accrual-Basis Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed, recognized as a liability until the obligation is fulfilled.