1.You ask Sally and Jim if they have any other sources of income, and they provide you with the following information for 2019.

Sally and Jim inherited artwork from a relative that passed away in January 2019. The relative had originally purchased the artwork for $10,000 in 1985. When they inherited the artwork, it was worth $35,000.

Sally went on the TV game show Wheel of Fortune and won a car with an FMV of $22,000. Sally does not like the car though, so she plans to sell it in 2020.

Jim's mother gave Jim a cash gift of $50,000 so that Jim could install a pool at the house.

Sally was hit by a car while crossing the street in a crosswalk and broke her leg. She sued the driver and won the lawsuit. She received $40,000 to compensate her for her injury. She also received $20,000 for punitive damages.

In her spare time, Sally builds and decorates miniature dollhouses. After working hard as an accountant, it is good stress relief. She often gives them away to friends and family, but sometimes she does sell them. During 2019 she sold several dollhouses for a total of $3,500. Sally estimates that her expenses, mostly for supplies such as wood and paint, total $4,000.

Sally and Jim also received $5,000 for renting their vacation home in Palm Springs. They usually do not rent it, but this year decided to rent it for 10 days during the Coachella music festival. They used the vacation home personally for 70 days, and it was vacant the rest of the year. Sally and Jim incurred the following costs related to their vacation home: $1,500 of utilities, $1,500 of gardening and landscaping, and $2,000 of repairs and maintenance.

Jim went to Las Vegas two times during 2019 to gamble. On one trip he won $5,000. On the second trip he lost $6,000.

Sally and Jim earned $2,500 of interest from their savings account and $1,000 of interest from a City of San Diego bond

a.Complete the table below and determine the amount of additional income that Sally and Jim must include in AGI in 2019. Show all work for any calculations and round all numbers to the nearest dollar.

Potential Item of Income: Amount Included in AGI:

Artwork

Car

Cash Gift

Lawsuit Winnings

Dollhouses

Vacation Home

Gambling

Interest

Total: