McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 11

Matteo, who is single and has no dependents, was planning on spending the weekend repairing his car.On Friday, Matteo's employer called and offered him $500 in overtime pay if he would agree to work over the weekend.Matteo could get his car repaired over the weekend at Autofix for $400.If Matteo works over the weekend, he will have to pay the $400 to have his car repaired, but he will earn $500.Assume Matteo pays tax at a flat rate of 15 percent rate?
a.Strictly considering tax factors, should Matteo work or repair his car if the $400 he must pay to have his car fixed is not deductible?
b.Strictly considering tax factors, should Matteo work or repair his car if the $400 he must pay to have his car fixed is deductible for AGI?