Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation =...

Data are given below on the adjusted gross incomex and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation = 4.68 + .16x, the point estimate of a reasonable level of total itemized deductions for a taxpayer with an adjusted gross income of $52.5 thousand is $13.08 thousand.

Adjusted Gross Income ($1000s)	Reasonable Amount of Itemized Deductions ($1000s)
22		9.6
27		9.6
32		10.1
48		11.1
65		13.5
85		17.7
120		25.5

In the questions that follow, enter the dollar amounts requested. For example, if the regression results provide a value of 11.74 thousand, enter 11,740 as the dollar amount in the box. Use Table 1 of Appendix B.

Develop a 95% confidence interval for the amount of total itemized deductions for all taxpayers with an adjusted gross income of $52,500 (to the nearest whole number).
$ ( , )

Develop a 95% prediction interval for the amount of total itemized deductions for a particular taxpayer with an adjusted gross income of $52,500 (to the nearest whole number).
$ ( , )

If the particular taxpayer referred to in part (b) claimed total itemized deductions of $20,400, would the IRS agent's request for an audit appear to be justified?
Select: Yes, because the deduction is larger than expected Yes, because the deduction is expected No, because the deduction is lower than expectedItem 5

Use your answer to part (b) to give the IRS agent a guideline as to the amount of itemized deductions that would suggest an audit for a taxpayer with an adjusted gross income of $52,500.

Any deductions exceeding the upper limit of $ could suggest an audit.

TABLE 4<br>F DISTRIBUTION<br>Area or<br>probability<br>Entries in the table give F values where α 1s the area or probability in the upper tail of the F distribution. For example, with 4 numerator degrees of freedom.<br>8 denominator degrees of freedom, and a .05 area in the upper til, Fs 3.84.<br>Denominat tor<br>Degrees<br>of Freedom<br>Numerator Degrees of Freedom<br>Tai<br>15<br>10<br>60<br>100<br>9864950 5359 55.83 57.24 58.20 58.9 5944 5986 60.19 61.22 61.74 62.05 62.26 62.53 62.79 630 63.30<br>161.45 199.50 215.71 224.58 230.16 233.99 236.77 238.88 240.54 241.88 245.95 248.02 2匉.26 250.10 251.14 252.20 253.04 254.19<br>025 647.79 9948 64.15 89960 92183 37.948.20 95664 963.28 96863 98487 993.08 998.09 100140 1005.60 1009.79 1013.16 1017.76<br>01 4052.18 4999.34 5903.53 5624.26 5763.96 5858.95 5928.33 5980.95 6022.40 6055.93 6156.97 6208.66 6239.86 626035 6286.43 6312.97 6333.92 636280<br>9.38<br>949<br>1851 19.00 9.16 19.25 1930 19.33 19.35 19.37 19.38 1940 1943 19,45 1946 1946 19,47 1948 1949 1949<br>385 39.00 39.17 39.25 39.3039.33 39.36 3937 39.39 3940 3943 39,45 3946 3946 39.47 3948 3949 3950<br>98.50 99.00 99.16 99.25 99.30 9933 99.36 99.38 99.39 9940 9943 99.45 9946 99.47 99.48 9948 9949 99.50<br>8.53<br>9.00<br>9.29<br>9.37<br>9.39<br>942<br>946<br>948<br>9.24<br>9.35<br>945<br>947<br>025<br>5.39<br>9.28<br>5.28<br>8.94<br>5.27<br>8.89<br>5.24<br>5.23<br>8.79<br>5.20<br>8.70<br>5.18<br>10.13<br>1744 1604 5.44 5.10 1488 14.7314.62 14.54 14.47 442 14.251417 4.12 1408 14.04 13.99 13.96 13.91<br>34.12 3082 2946 28.71 28.24 27.9 277 2749 27.34 27.23 2687 2669 26.58 26.50 26.41 26.32 2624 26.14<br>8.63<br>8.62<br>8.59<br>8.57<br>8.55<br>8.85<br>4.54<br>7.7<br>3.98<br>609<br>3.95<br>6.04<br>3.94<br>6.00<br>8.90<br>3.92<br>5.96<br>3.83<br>3.79<br>569<br>8.36<br>3.8413.75 1365 13.58 13.47<br>3.78<br>5.66<br>3.76<br>5.72<br>5.80<br>8.56<br>6.26<br>5.75<br>6.94<br>12.22 105<br>6.59<br>5.86<br>8.50<br>21.20 18.00 1669 15.98 5.52 5. 4.98 14.80 14.66 14.55 4.20 14.02 3.91<br>01<br>i0<br>05<br>3.324 3.21<br>4.56<br>6.33<br>9.55<br>4.52<br>6.27<br>945<br>4.50<br>6.23<br>9.38<br>4.46<br>443<br>10.0<br>6,26 3.27 2.06 39 10.97 1067 1046 09 0,16 10,05<br>6,76<br>6,08<br>9.29<br>01<br>9.20<br>

Extracted text: TABLE 4 F DISTRIBUTION Area or probability Entries in the table give F values where α 1s the area or probability in the upper tail of the F distribution. For example, with 4 numerator degrees of freedom. 8 denominator degrees of freedom, and a .05 area in the upper til, Fs 3.84. Denominat tor Degrees of Freedom Numerator Degrees of Freedom Tai 15 10 60 100 9864950 5359 55.83 57.24 58.20 58.9 5944 5986 60.19 61.22 61.74 62.05 62.26 62.53 62.79 630 63.30 161.45 199.50 215.71 224.58 230.16 233.99 236.77 238.88 240.54 241.88 245.95 248.02 2匉.26 250.10 251.14 252.20 253.04 254.19 025 647.79 9948 64.15 89960 92183 37.948.20 95664 963.28 96863 98487 993.08 998.09 100140 1005.60 1009.79 1013.16 1017.76 01 4052.18 4999.34 5903.53 5624.26 5763.96 5858.95 5928.33 5980.95 6022.40 6055.93 6156.97 6208.66 6239.86 626035 6286.43 6312.97 6333.92 636280 9.38 949 1851 19.00 9.16 19.25 1930 19.33 19.35 19.37 19.38 1940 1943 19,45 1946 1946 19,47 1948 1949 1949 385 39.00 39.17 39.25 39.3039.33 39.36 3937 39.39 3940 3943 39,45 3946 3946 39.47 3948 3949 3950 98.50 99.00 99.16 99.25 99.30 9933 99.36 99.38 99.39 9940 9943 99.45 9946 99.47 99.48 9948 9949 99.50 8.53 9.00 9.29 9.37 9.39 942 946 948 9.24 9.35 945 947 025 5.39 9.28 5.28 8.94 5.27 8.89 5.24 5.23 8.79 5.20 8.70 5.18 10.13 1744 1604 5.44 5.10 1488 14.7314.62 14.54 14.47 442 14.251417 4.12 1408 14.04 13.99 13.96 13.91 34.12 3082 2946 28.71 28.24 27.9 277 2749 27.34 27.23 2687 2669 26.58 26.50 26.41 26.32 2624 26.14 8.63 8.62 8.59 8.57 8.55 8.85 4.54 7.7 3.98 609 3.95 6.04 3.94 6.00 8.90 3.92 5.96 3.83 3.79 569 8.36 3.8413.75 1365 13.58 13.47 3.78 5.66 3.76 5.72 5.80 8.56 6.26 5.75 6.94 12.22 105 6.59 5.86 8.50 21.20 18.00 1669 15.98 5.52 5. 4.98 14.80 14.66 14.55 4.20 14.02 3.91 01 i0 05 3.324 3.21 4.56 6.33 9.55 4.52 6.27 945 4.50 6.23 9.38 4.46 443 10.0 6,26 3.27 2.06 39 10.97 1067 1046 09 0,16 10,05 6,76 6,08 9.29 01 9.20

Jun 01, 2022

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Data are given below on the adjusted gross income x and the amount of itemized deductions taken by taxpayers. Data were reported in thousands of dollars. With the estimated regression equation =...

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