Question

Hello,

Book: Fundamentals of Federal Income Taxation (17th Edition) Chapter 18CB, Problem 1P

Seems to me that the answer for this question is wrong. According to Chegg Study website the answer for this question is $ 11,900 of taxable income. I think that the answer is $ 14,900. Please, I ask to double check this answer.

This is the problem: “Taxpayer's taxable income for the current year is $14,900. Taxpayer is allowed a § 151(a) exemption deduction of $2,000. Taxpayer's basic standard deduction is $3,000 (§ 63(c)(2)(C)). Taxpayer's total deductible itemized deductions are determined under § 67. The itemized deductions of $1,500 for interest and taxes are deductible in full (see § 67(b)(1) and (2)) but the remaining miscellaneous itemized deductions of $2,000 for unreimbursed travel, tax preparation fees, and bar association fees are subject to the 2% floor of § 67(a) and they are therefore deductible only to the extent of $2,000 less (2% of $20,000) $400 or $1,600. Thus Taxpayer's total itemized deductions are $3,100 and since that amount exceeds the standard deduction of $3,000, Taxpayer will make a § 63(e) election to itemize. Computationally Taxpayer's taxable income is determined as follows”

Answer 1

Section 63 provides that the individual who don’t itemize deductions for a taxable year computes the taxable income as the Adjusted Gross Income less Standard Deduction less Personal Exemptions u/s 151.

Accordingly, the income stands to $20000 - $3000 - $1600 = $15400

Basic standard deduction for an individual for a taxable year is limited to $3000

Or if the person elects not to itemize deductions then the taxable income can be subject to the standard deduction and only the allowable portion of the other deduction.

Income: $20000 - $3000 - $1500 = $15500