This Fall Marsha and Jeff Paid $5,000 for Their Son

question 26

Multiple Choice

This fall Marsha and Jeff paid $5,000 for their son Josh's tuition and fees at State University (a qualified education institution) . They also paid $1,000 for Josh's books. How much of these two payments can Marsha and Jeff deduct this year, assuming Josh is their dependent and their modified AGI is $135,000?

• A) Marsha and Jeff can deduct $5,000 for AGI.
• B) Marsha and Jeff can deduct $4,000 for AGI.
• C) Marsha and Jeff can deduct $2,500 for AGI.
• D) Marsha and Jeff can deduct $2,000 for AGI.
• E) None - the tuition is not deductible.

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Definitions:

Net Sales

The amount of sales revenue remaining after deducting sales returns, allowances, and discounts.

Sales Returns

Transactions where customers return previously purchased merchandise, possibly due to defects or dissatisfaction, impacting the seller's revenue.

Freight-in

The cost of shipping goods to the buyer's location, which is often included in the inventory cost.

Supplies Expense

The cost associated with the consumption of supplies utilized during an accounting period in the operation of a business.