Diana and Ryan Workman were married on January 1 of last year. Diana has an eight-year-old son, Jorge, from her previous marriage. Ryan works as a computer programmer at Datafile Incorporated (DI) earning a salary of $104,000. Diana is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year.

a. Ryan earned a $104,000 salary for the year.

b. Ryan borrowed $13,600 from DI to purchase a car. DI charged him 2 percent interest ($272) on the loan, which Ryan paid on December 31. DI would have charged Ryan $880 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan.

c. Diana received $2,800 in alimony and $6,100 in child support payments from her former husband. They divorced in 2016.

d. Diana won a $1,060 cash prize at her church-sponsored Bingo game.

e. The Workmans received $1,300 of interest from corporate bonds and $1,050 of interest from a municipal bond. Diana owned these bonds before she married Ryan.

f. The couple bought 82 shares of ABC Incorporated stock for $56 per share on July 2. The stock was worth $79 a share on December 31. The stock paid a dividend of $1 per share on December 1.

g. Dianas father passed away on April 14. She inherited cash of $66,000 from her father and his baseball card collection, valued at $3,600. As the beneficiary of her fathers life insurance policy, Diana also received $166,000.

h. The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $2,800.

i. Ryan received $3,600 cash for reaching 10 years of continuous service at DI.

j. Ryan was hit and injured by a drunk driver while crossing a street at a crosswalk. He was unable to work for a month. He received $9,200 from his disability insurance. DI paid the premiums for Ryan, but it reported the amount of the premiums as compensation to Ryan on his year-end W-2.

k. The drunk driver who hit Ryan in part (j) was required to pay his $3,600 medical costs, $3,100 for the emotional trauma he suffered from the accident, and $8,200 for punitive damages.

l. For meeting his performance goals this year, Ryan was informed on December 27 that he would receive a $6,600 year-end bonus. DI (located in Houston, Texas) mailed Ryans bonus check from its payroll processing center (Tampa, Florida) on December 28. Ryan didnt receive the check at his home until January 2.

m. Diana is a 10 percent owner of MNO Incorporated, a Subchapter S corporation. The company reported ordinary business income for the year of $124,000. Diana acquired the MNO stock two years ago.

n. Dianas day care business collected $115,000 in revenues. In addition, customers owed her $11,000 at year-end. During the year, Diana spent $13,500 for supplies, $9,500 for utilities, $31,000 for rent, and $1,300 for miscellaneous expenses. One customer gave her use of his vacation home for a week (worth $10,500) in exchange for Diana allowing his child to attend the day care center free of charge. Diana accounts for her business activities using the cash method of accounting.

o. Ryans employer pays the couples annual health insurance premiums of $13,500 for a qualified plan

1. What are wages, salaries, tips, etc.

2a. What is tax exempt interest

3a. Qualified/ordinary dividends

4a. IRA distributions

5a. Pensions and annuities

6a. Social security benefits

7. Capital gain/loss amount

8. Other income