All numbers are for 2020 tax year. John (44 years old) and Margaret (39 years old) Terry have four children. John works for Virgin Galactic as a flight engineer and Margaret is a freelance writer / editor. Their family is covered by a qualified High Deductible Health Insurance Plan. Johns gross base pay is $120,000 and Margarets net earnings from self-employment is $75,000. Their children are Jacob (16), Katie (14), Rachael (12), and Luke (10).

For the current tax year, John and Margaret prepared for retirement. Johns employer sponsors a profit sharing plan and Margaret utilizes a SEP IRA. Johns employer contributes 14% of his gross pay to the profit sharing plan. The profit sharing plan also includes a CODA (401(k)) option and John contributed the maximum amount allowed to the 401(k) plan. There is no match. John pays the health insurance premiums through his employers cafeteria plan, his portion of the health insurance premiums are $7,000 per year. John also contributed the maximum allowed amount to the HSA plan sponsored by his employer.

In addition to his base pay, John also had the following occur during the year:

1. He exercised 1,000 incentive stock options. He received the options in 2018 and the strike price was $1 per share. He exercised the options on January 1 of 2020 when the share price was $56 per share. He has not sold any of his stock shares.
2. He received non-qualified stock options during the year. On January 1, 2020 he was awarded 500 options. On the day of the award the options had a strike price of $40 per share and the share price was $56 per share. John exercised all 500 options on January 2, 2020 when the share price was $58 per share.
3. John and Margaret sold a rental home during the year. They purchased the rental home for $120,000 in 2010. They had claimed $42,000 of depreciation. The adjusted basis of the rental home at the time of sale was $105,000 due to improvement made. They sold the rental home for $225,000 on January 10, 2020.

John and Margaret also incurred the following expenses during the year: $4,000 in student loan interest; $4,000 contribution to Utahs 529 plan ($1,000 for each child, John lives in Georgia); State income taxes of $15,000; property taxes of $5,000; mortgage interest of $10,000; and $1,000 to their university alumni fund and gave $300 worth of clothing to the Goodwill. John and Margaret also gave appreciated stock to their church. John is an avid investor and purchased Ford stock for $15 per share. He and Margaret donated 200 shares (basis $15/share, FMV at the time of gift $197/share) of Ford stock to their church.

What is Johns and Margarets tax liability? Please prepare Form 1040 and complete any supporting documents.