For Each of the Following Situations,determine Whether the Item Is

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The Answer is a.Both Tony and Rika are allowed to contribute $5,500 to their IRA accounts.Because Tony is covered by an employer-sponsored pension plan and their adjusted gross income exceeds $115,000,he is not eligible to deduct his contribution.However,because Rika is not covered by an employer-sponsored pension plan,her contribution is fully deductible if their adjusted gross income is less than or euqual to $178,000.Since their adjusted gross income equals $178,000,the amount that she can deduct must be reduced by 0% [($178,000 - $178,000)/ $10,000].This leaves her with an allowable deduction for adjusted gross income of $5,500 [$5,500 - ($5,500 * 0%)].
b.The maximum amount of student loan interest that can be deducted is phased-out ratably over a $15,000 range when adjusted gross income exceeds $60,000.Since her adjusted gross income is greater than $60,000 the amount that she can deduct must be reduced by 20% [($63,000 - $60,000)/ $15,000].This leaves her with an allowable deduction for adjusted gross income of $1,920 [$2,400 - ($2,400 *20%)].The remaining $480 ($2,400 - $1,920)of interest is personal and is not deductible.
c.Rowland must include the $4,000 in gross income and he can deduct $3,140 of moving expenses for adjusted gross income.He can only deduct his direct moving expenses.Direct moving expenses include the cost of moving household goods ($2,700)and personal effects to the new residence,and airfare to his new residence ($340).The housing hunting expenses and temporary living expenses are considered personal in nature and are not deductible.

For Each of the Following Situations,determine Whether the Item Is

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