7.Jerry and Jess (under 60) have 3 children. They inherited money in January and retired. Here is their income.

Inherited Assets2,000,000

Chase Interest Income75,000

Municipal bond interest40,000

Qualifying dividends25,000

They have itemized deductions of $15,000. They provide over half of the support of all of their children who live with them and are:

• Jeff 18 not a student making $10,000
• Barb 20 not a student making $3,000
• Stephanie 21 a full time student making $8,000

Is Jeff a dependent? Why?

Is Barb a dependent?Why?

Is Stephanie a dependent?Why?

Compute their adjusted gross income.

Compute their taxable income.

Compute their tax liability.

Compute the tax liability for their children.