Heather and Nikolay Laubert are married and file a joint income tax return. Their address is 3847 Jackdaw Path, Madison, WI 58493. Nikolay's Social Security number is 000-00-1111, and Heather's is 000-00-2222. Nikolay is a mechanical engineer, and Heather is a highly renowned speech therapist. She is self-employed. They report all their income and expenses on the cash method. For 2017, they report the following items of income and expense:

Heather and Nikolay sold the following assets:

Heather owned the KLN stock and sold it to her brother, Jacob. Heather and Nikolay used the motorcycle for personal recreation.

In addition to the items above, they donate Miner Corporation stock to their community church. The FMV of the stock on the date it is donated (8/18/17) is $6,200. It cost $2,700 when purchased on 3/12/98. Heather and Nikolay's home is burglarized during the year. The burglar stole an entertainment system (FMV $3,500; cost $5,000), an antique diamond ring and pendant (FMV $12,000; cost $10,000), and a painting (FMV $1,500; cost $1,300). The insurance company pays $1,500 for the entertainment system, $4,000 for the jewelry, and $500 for the painting. Complete Heather and Nikolay's Form 1040, Schedules A, C, D, and SE, Form 4684, and Form 8283. For purposes of this problem, disregard the alternative minimum tax and any credits.

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Gross receipts from Heather's business Rent on Heather's office Receivables written off during the year (received in Heather's business) Subscriptions to linguistic journals for Heather Salary for Heather's secretary-receptionist Nikolay's salary Qualified medical expenses Property taxes on their personal residence State income tax refund received this year (the tax benefit was re- ceived in the prior year from the state income tax deduction) State income taxes withheld on Nikolay's salary Federal income taxes withheld on Nikolay's salary Heather's estimated tax payments Interest paid on residence Income tax preparation fee for the prior year's return paid this year ($500 is allocated to preparation of Schedule C) $110,000 12,000 1,300 250 22,000 78,000 12,000 4,200 400 4,600 12,000 20,000 11,000 $940