Problem:
Kyle and Alyssa paid $1,000 and $2,000 in qualifying expenses for their two daughters Jane and Jill, respectively, to attend the University of California. Jane is a sophomore and Jill is a freshman. Kyle and Alyssa's AGI is $132,000 and they file a joint return.
Required:
Question: What is their allowable American opportunity tax credit after the credit phase-out based on AGI is taken into account?
- $0.
- $2,000.
- $3,000.
- $3,700.
Note: Please show how you came up with the solution.