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Scenario $4$: Tax Impact of Selling Investment Property

Wages: Thomas $($$$78,000),$ Laura $($$$45,000)$

Qualified Business Income: None

Itemized Deductions: $$22,000$

Allowable deduction for self$-$employment tax: $$0$

Long$-$term capital gain from selling rental property: $$80,000$

Basis in the property: $$250,000$

Calculate AGI and taxable income. Consider:

What is the applicable capital gains tax rate?

Are there any depreciation recapture considerations?

Scenario $5$: Education Credits and Phaseouts

Wages: Robert $($$$48,000),$ Sarah $($$$42,000)$

Qualified Business Income: None

Itemized Deductions: $$19,000($includes student loan interest$)$

Allowable deduction for self$-$employment tax: $$0$

Qualifying Children: $2($both in college, incurring tuition expenses$)$

Calculate AGI and taxable income. Analyze:

Do they qualify for the American Opportunity Tax Credit, Lifetime Learning Credit, or both?

Are there income limitations that might affect their eligibility for these credits?

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