Answer :
Myers can deduct $4,200 of his $6,000 traditional IRA contribution.Myers's $6,000 contribution is reduced by this fraction, which gives us the amount of Myers's IRA deduction that is phased out:0.3 x $6,000 = $1,800Therefore, Myers can deduct $6,000 - $1,800 = $4,200 of his $6,000 contribution.
Myers, who is single, has compensation income of $73,000 in 2021. He is an active participant in his employer's qualified retirement plan. Myers contributes $6,000 to a traditional IRA. Based on these facts, Myers can deduct $2,000 of his $6,000 contribution.According to the phase-out limits provided by Exhibit 19.4, since Myers is an active participant in a qualified retirement plan, his IRA deduction will be subject to a phase-out range. For the tax year 2021, this range begins at a modified adjusted gross income (MAGI) of $66,000 and ends at $76,000. Myers's MAGI is $73,000, which falls within this range.Therefore, the percentage that Myers's IRA deduction is reduced by is calculated by subtracting the beginning of the phase-out range ($66,000) from Myers's MAGI ($73,000) and then dividing the result by the phase-out range's width ($10,000):($73,000 - $66,000) ÷ $10,000 = 0.7Since the result is greater than 0.5, the fraction used to determine the amount of the IRA deduction that is phased out is 0.3.
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