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Problem 6-40 (LO.3) Trevor, a friend of yours from high school, works as a server...

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Accounting

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Problem 6-40 (LO.3) Trevor, a friend of yours from high school, works as a server at the ST Caf. He asks you to help him prepare his Federal income tax return. When you inquire about why his bank deposits substantially exceed his tip income, he confides to you that he is a bookie on the side. Trevor then provides you with the following documented income and expenses for the year: Tip income $ 16,000 52,000 Gambling income 29,000 Gambling expenses Payouts to winners Employee compensation Bribe to police officer who is aware of Trevor's bookie activity 8,000 7,500 a. Complete the following to determine how the gambling items will affect Trevor's AGI (ignore the impact of self-employment taxes). If an amount is zero, enter "0." $ Gross income from gambling Deductible expenses: Salaries Payouts to winners III Bribe to police officer Subtotal in AGI b. How will all of these items affect Trevor's taxable income (ignore the impact of self-employment taxes)? His taxable income by $

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