Tim and Monica Nelson are married, file a joint return, and are your newest tax clients. They

Question:

Tim and Monica Nelson are married, file a joint return, and are your newest tax clients. They provide you with the following information relating to their 2023 tax return:

1. Tim works as a pediatrician for the county hospital. The W-2 form he received from the hospital shows wages of $$150,000$ and state income tax withheld of \($8,500.

2.\) Monica spends much of her time volunteering, but also works as a substitute teacher for the local schools. During the year, she spent 900 hours volunteering. When she doesn’t volunteer, she earns $$8.00$ per hour working as a substitute. The W-2 form she received from the school district shows total wages of $$3,888$ and state income tax withheld of $$85$.
3. On April 13, the couple paid $$250$ in state taxes with their 2022 state income tax return. The Nelsons’ state and local sales taxes in 2023 were $$5,500$.
4. On December 18, the Nelsons donated a small building to the Boy Scouts of America. They purchased the building three years ago for $$80,000.$ A professional appraiser determined the fair market value of the home was $$96,000$ on December 12.
5. Tim and Monica both received corrective eye surgery, at a total cost of $$3,000.$ They also paid $$1,900$ in health insurance premiums.
6. On June 1, the couple bought a car for $$30,000,$ paying $$18,000$ down and borrowing $$12,000.$ They paid $$750$ total interest on the loan in 2023.
7. On June 10, the Nelsons took out a home equity loan of $$20,000$ to expand their home. They paid a total of $$850$ interest with their monthly payments on the loan.
8. The Nelsons paid a total of $$2,300$ interest on their original home loan.
9. They sold stock in Cabinets, Inc. for $$5,200,$ which they purchased for $$7,900$ in March of the current year. They also sold stock in The Outdoor Corporation for $$12,500,$ which they purchased several years ago for $$8,600$.
10. Tim incurred the following expenses related to his profession, none of which were reimbursed by his employer:

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11. During the year, the couple paid their former tax advisor $$700$ to prepare their prior year tax return.
12. The Nelsons do not have children, and they do not provide significant financial support to any family members.

Required:

Compute the Nelsons’ taxable income for 2023.

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