Barry, 55, and Vera, 49, are married and are the parents of 23-year-old Julia, 20-year-old Gary, and 10-year-old twins Larry and Laura. They have provided the following information for 2018:

• Barry is a talent agent. He earns a salary of $350,000 per year. His employer has withheld $88,000 in federal income taxes and $30,000 in state income taxes.
• Barry makes beef jerky in his spare time. At first, he gave it away to his friends, but soon people wanted to buy it. Barry finds the jerky-making process relaxing. He sells packages of jerky online. In all the years that he has been selling jerky, he has never realized a profit, nor is he concerned about that. He just makes it when he has time, so he does not make it on a consistent basis. Sometimes, he does not make any for months. In 2018, he had sales of $20,000 and incurred the following expenses: Materials and supplies $15,000 Shipping costs 3,500 Packaging costs 2,500 Website maintenance 2,000 Equipment rental 3,600

• Vera is a life coach. Her business is unincorporated. She earned gross revenues of $75,000 and incurred the following expenses: Malpractice insurance $2,500 Office rent 12,000 Trade journal subscriptions 300 Professional development courses 3,500 Supplies 1,750 Donations to her fathers campaign to run for senator 50,000
• Julia is a full-time student at Craven College. She received a scholarship that covered all her tuition, books, and supplies. Her parents pay for her room and board and miscellaneous living expenses. To save money, Julia moves back to her parents house during her summer breaks. This year, she earned $6,000 from her summer job. She has saved $4,000 of it for a new car and has spent the rest on clothes and entertainment.
• Gary is a part-time student at a local community college. He lives at home and is fully supported by his parents. He works part-time at a fast-food restaurant and has earned $10,000. He has spent all his earnings on electronics and entertainment.
• Larry has a speech defect, and his doctor referred him to a speech therapist. The therapist was paid $10,000, and the cost is not covered by insurance.
• During the year, Barry paid $12,000 in health-insurance premiums and $1,500 in dental-insurance premiums through a health care plan sponsored by his employer. They paid $3,000 for corrective eye surgery for Julia. They paid $8,500 for braces for Laura and were reimbursed $2,000 by their dental-insurance carrier. Vera paid $2,000 for Botox injections to give her a more youthful appearance. Barry paid $25,000 for a hair transplant, hoping that his enhanced appearance will attract more clients.
• They paid $7,500 to their veterinarian for cancer treatments for one of their pet dogs.
• Barry was in Las Vegas for a conference and won $25,000 at roulette but lost $10,000 at blackjack.
• Vera received a $500,000 cash inheritance from her late aunt.
• Vera was so appreciative of the care that her aunt received from Angel Hospice Care, a qualified charity, that she donated $100,000 to them.
• At the end of the year, Barry sold his shares in Topika Co. for $3,900. He had purchased the shares nine months earlier for $2,500. Vera sold her shares in Knoll Ltd. for $1,900. She had purchased the stock six years ago for $7,800.
• Barry and Vera also received the following: Dividends from Kate Corp. $4,000 Interest income from a savings account 2,200 Interest income from City of Chicago bonds 10,800
• Barry and Vera also paid the following: Property taxes on house $6,700 Home mortgage interest 19,500 Credit card interest 2,300 State sales taxes 6,500 Donations to church 3,600

• Barry and Vera plan to file a joint return, as usual.

Required:

1. Calculate Barry and Veras AGI and taxable income. Ignore any self-employment taxes. For items that you have not included, explain why they have not been included.
2. Barry is an active member of an employer-sponsored pension plan. Both Barry and Vera want to make contributions to IRAs. Advise them as to what type of IRAs they are eligible to contribute to and the maximum amount, if any, that each of them may contribute.