Trevor is a single individual who is a cash-method, calendar-year taxpayer. For each of the next two years (2020 and 2021), Trev
or expects to report AGI of $80,000, contribute $8,000 to charity, and pay $2,800 in state income taxes.
Required:
a. Estimate Trevor’s taxable income for 2020 and 2021 using the 2020 amounts for the standard deduction for both years.
b. Now assume that Trevor combines his anticipated charitable contributions for the next two years and makes the combined contribution in December of 2020. Estimate Trevor’s taxable income for each of the next two years using the 2020 amounts for the standard deduction.
c. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will cost $2,000 and $10,000, respectively, each year. Estimate Trevor’s taxable income for each of the next two years (2020 and 2021) using the 2020 amounts for the standard deduction and also assuming Trevor makes the charitable contribution of $8,000 and state tax payments of $2,800 in each year.
d. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will cost $2,000 and $10,000, respectively, each year. Assume that Trevor makes the charitable contribution for 2021 and pays the real estate taxes for 2021 in December of 2020. Estimate Trevor’s taxable income for 2020 and 2021 using the 2020 amounts for the standard deduction.
Required:
a. Estimate Trevor’s taxable income for 2020 and 2021 using the 2020 amounts for the standard deduction for both years.
b. Now assume that Trevor combines his anticipated charitable contributions for the next two years and makes the combined contribution in December of 2020. Estimate Trevor’s taxable income for each of the next two years using the 2020 amounts for the standard deduction.
c. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will cost $2,000 and $10,000, respectively, each year. Estimate Trevor’s taxable income for each of the next two years (2020 and 2021) using the 2020 amounts for the standard deduction and also assuming Trevor makes the charitable contribution of $8,000 and state tax payments of $2,800 in each year.
d. Trevor plans to purchase a residence next year, and he estimates that additional property taxes and residential interest will cost $2,000 and $10,000, respectively, each year. Assume that Trevor makes the charitable contribution for 2021 and pays the real estate taxes for 2021 in December of 2020. Estimate Trevor’s taxable income for 2020 and 2021 using the 2020 amounts for the standard deduction.
1 answer:
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Answer: The answer is b -an increase in income will cause the demand curve of an inferior good to shift to the left.
Explanation: An inferior good is a good whose demand reduces as income increases. It's demand has an inverse or negative relationship with income. Therefore as the income of the individual increases, the demand for an inferior good reduces. On a graph, the reduction in demand is depicted by an inward shift of the demand curve or a shift of the demand curve to the left to show a reduction in demand. Income is one of the factors that leads to a shift in the demand curve. The income elasticity would be negative
