COMPREHENSIVE PROBLEM I:14-66 Mike Webb, married to Nancy Webb, is employed by a large pharmaceutical company and earns a salary. In addition, Mike is an entrepreneur and has two small businesses on the side, both of which operate as sole proprietorships. One is a profitable consulting business where Mike provides financial and retirement advice to pharmacists. The other involves the manufacture of Christmas novelties in China, selling the products in gift shops in the U.S. This business is struggling. However, Mike feels the Christmas novelty business has great potential. Mike reports the following for 2021: Salary $157,000 Consulting practice: Revenues $65,000 Ordinary expenses 12,000 53,000 Sole proprietorship: Revenues $22,000 Ordinary Expenses 40,000 (18,000) Interest (none tax-exempt) 3,000 Dividends, qualified 9,000 LTCG $24,000 STCL (4,000) 20,000 Itemized deductions: State and local taxes (before limitations) $14,000 Real estate taxes (before limitations) Mortgage interest on personal residence Charitable contributions 8,000 9,000 8,000 39,000 Child care expenses: The Webbs have two dependent children, ages 13 and 11, and pay child care expenses of $4,000 per year for each child. Nancy is not employed, but is a full-time student (all of 2021) at State University, majoring in Accounting. Federal income tax withheld from salary Estimated taxes paid for 2021 $21,000 14,000 For 2020, Mike and Nancy's AGI was $175,000 and their actual federal income tax liability was $29,000. a. Compute the Webbs regular federal income tax liability for 2021, including self- employment taxes. b. Are the Webbs subject to AMT in 2021, assuming they have additional AMT prefer- ences of $70,000? c. Are the Webbs due a refund for 2021? d. Are the Webbs subject to any underpayment penalties for 2021?