Medical expenses this year

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Reference no: EM133208525

1. Ms. Lincoln paid $14,340 of medical expenses this year that were not reimbursed by her insurance provider. Assume the taxable year is 2021.

A. Compute the after-tax cost of these expenses assuming that Ms. Lincoln doesn't itemize deductions on her Form 1040.

B. Compute the after-tax cost of these expenses assuming that Ms. Lincoln itemizes deductions, her AGI is $64,400, and her marginal tax rate is 24 percent.

C. Compute the after-tax cost of these expenses assuming that Ms. Lincoln itemizes deductions, her AGI is $209,200, and her marginal tax rate is 32 percent.

2. Ms. Prince wants to create a scholarship in honor of her parents at the law school from which she received her degree. She could endow the scholarship with $715,000 cash or with $715,000 worth of marketable securities with a cost basis of $429,000. Assume the taxable year is 2021.

If her AGI is $3.8 million, compute the after-tax cost of the two endowment options. Use Individual Tax Rate Schedules and Tax rates for capital gains and qualified dividends. (Enter your answers in dollars not in millions of dollars.

After-tax cost $ 286,000 $ 286,000.

Reference no: EM133208525

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