$1.$ Armando Z$.$ and Lourdes K$.$ Gonzales are married and file a joint return. Armando is self$-$employed as a dentist, and Lourdes is a college professor. Armando and Lourdes have three children. The oldest is Ricardo, who lives at home. Ricardo is a law student at $-$the University of Cincinnati and worked part time during the year, earning $$1,500,$ which he spent for his own support. Armando and Lourdes provided $$6,000$ toward Ricardo$$s support $($including $$4,000$ for Ricardo$$s fall tuition$).$ They also provided over half the support of their daughter, Selena, who is a full$-$time student at Edgecliff College in Cincinnati. Selena worked part time as an independent contractor during the year, earning $$3,200.$ Selena lived at home until she was married in December $2022.$ She filed a joint return with her husband, Tony, who earned $$30,000$ during the year. Felipe is the youngest and lived in the Gonzales$$s home for the entire year. The Gonzaleses provide you with the following additional information:

$2.$ Lourdes is a part$-$time lecturer at Xavier University in Cincinnati, where she earned

$$30,000.$ The university withheld federal income tax of $$3,375,$ state income tax of $$900,$

Cincinnati city income tax of $$375,$ $$1,860$ of Social Security tax, and $$435$ of Medicare

tax. She also worked part of the year for Delta Airlines. Delta paid her $$10,000$ in salary, and withheld federal income tax of $$1,125,$ state income tax of $$300,$ Cincinnati city income tax of $$125,$ Social Security tax of $$620,$ and Medicare tax of $$145.$

$3.$ The Gonzaleses received $$800$ of interest from State Savings Bank on a joint account. They received interest of $$1,000$ on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $$1,100$ on the loan. Armando received a dividend of $$540$ on General Bicycle

Corporation stock he owns. Lourdes received a dividend of $$390$ on Acme Clothing Corporation stock she owns. Armando and Lourdes received a dividend of $$865$ on jointly owned stock in Maple Company. All of the dividends received in $2022$ are qualified dividends.

$4.$ Armando practices under the name $$Armando Z$.$ Gonzales, DDS$.$ His business is located at $645$ West Avenue, Cincinnati, Ohio $45211,$ and his employer identification number is $01-2222222.$ Armando$$s gross receipts during the year were $$111,000.$ He did not receive any Form $1099$s$,$ and he did not have a requirement to file any Form $1099$s for any payee. Armando uses the cash method of accounting for his business. Armando$$s business expenses are as follows:

Advertising $ $1,200$

Professional dues $490$

Professional journals $360$

Contributions to employee benefit plans $2,000$

Malpractice insurance $3,200$

Fine for overbilling State of Ohio for work performed on welfare patient $5,000$

Insurance on office contents $720$

Interest on money borrowed to refurbish office $600$

Accounting services $2,100$

Miscellaneous office expense $388$

Office rent $12,000$

Dental supplies $7,672$

Utilities and telephone $3,360$

Wages $30,000$

Payroll taxes $2,400$

$5.$ In June, Armando decided to refurbish his office. This project was completed, and the assets placed in service on July $1.$ Armando$$s expenditures included $$8,000$ for new office furniture, $$6,000$ for new dental equipment $($seven$-$year recovery period$),$ and $$2,000$ for a new computer. Armando elected to compute his cost recovery allowance using MACRS. He did not elect to use $179$ immediate expensing but wishes to claim any available bonus depreciation.

$6.$ Lourdes$$s mother, Maria, died on July $2,2017,$ leaving Lourdes her entire estate.

Included in the estate was Maria$$s residence $(325$ Oak Street, Cincinnati, Ohio $45211).$

Maria$$s basis in the residence was $$30,000.$ The fair market value of the residence on July $2,2017,$ was $$155,000.$ The Gonzaleses have held the property as rental property and have managed it themselves. From July $30,2017$ until June $30,2022,$ they rented the house to the same tenant. The tenant was transferred to a branch office in California and moved out at the end of June. Since they did not want to bother finding a new tenant, Armando and Lourdes sold the house on June $30,2022.$ They received $$140,000$ for the house and land $($$$15,000$ for the land and $$125,000$ for the house$),$ less a $6$ percent commission charged by the broker. They had depreciated the house using the MACRS rules and conventions applicable to residential real estate. To compute depreciation on the house, the Gonzaleses had allocated $$15,000$ of the property$$s basis to the land on wh