During the Current Year, Paul, a Single Taxpayer, Reported the Following

question 2

Essay

During the current year, Paul, a single taxpayer, reported the following items:
$\begin{array}{ll}\text { Salary } & \$ 75,000 \\\text { Interest on original loan incurred to purchase home } & 14,000 \\\text { Taxes on home } & 3,500 \\\text { Revenue from hobby } & 5,000 \\\text { Interest on home equity loan incurred to purchase hobby assets } & 800 \\\text { Exnenses of hobby } & 8.500\end{array}$ Compute Paul's taxable income for the year.

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Definitions:

Economically Liberal

Favoring policies that promote free market competition, minimal government intervention in the economy, and the protection of individual property rights.

Federal System

A form of government in which power is divided between a central (national) authority and constituent (state or regional) units, allowing for shared sovereignty.

Government Power

The authority held by a government to enact laws, regulate behaviors, and enforce order for the welfare of the society.

Cooperative Federalism

A concept where state, local, and federal governments collaborate and share responsibilities, powers, and resources to solve common problems or improve citizens’ lives.