Halie and Joe Partman were married on January 1 of last year.Halie has an eight-year-old son, Jorge, from her previous marriage.Joe works as a computer programmer at DUO Inc. (DI) earning a salary of $96,000.Halie is self-employed and runs a day care center.The Partmans reported the following financial information pertaining to their activities during the current year.

a.Joe earned a $96,000 salary for the year.

b.Joe borrowed $12,000 from DI to purchase a car.DI charged him 2 percent interest ($240) on the loan, which Joe paid on December 31, but would have charged Joe $720 if interest was calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan.

c.Halie received $2,000 in alimony and $4,500 in child support payments from her former husband.

d.Halie won a $900 cash prize at her church-sponsored Bingo game.

e.The Partmans received $1,500 of interest from corporate bonds and $2,850 of interest from a municipal bond.Halie owned these bonds before she married Joe.

f.The couple bought 50 shares of ABC Inc. stock for $40 per share on July 2.The stock was worth $47 a share on December 31. The stock paid a dividend of $6.00 per share on December 1.

g.Halie's father passed away on April 14.She inherited cash of $50,000 from her father and his baseball card collection, valued at $2,000.As beneficiary of her father's life insurance policy, Halie also received $150,000.

h.The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $1,200. They also incurred $500 of gambling losses.

i.Joe received $1,400 cash for reaching 10 years of continuous service at DI.

j.Joe 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 $6,000 from his disability insurance.DI paid the premiums for Joe but they reported the amount of the premiums as compensation to Joe on his year-end W-2.

k.The drunk driver who hit Joe in part (j) was required to pay his $5,000 medical costs, $1,500 for the emotional trauma he suffered from the accident, and $5,000 for punitive damages.

l.For meeting his performance goals this year, Joe was informed on December 27 that he would receive a $5,000 year-end bonus.DI (located in Houston, Texas) mailed Joe's bonus check from its payroll processing center (Tampa, Florida) on December 28. Joe didn't receive the check at his home until January 2.

m.Halie is a 10 percent owner of MNO Inc., a Subchapter S corporation.The company reported ordinary business income for the year of $92,000.Halie acquired the MNO stock two years ago.

n.Halie's daycare business collected $35,000 in revenues.During the year, Halie spent $5,500 for supplies, $1,500 for utilities, $15,000 for rent, and $500 for miscellaneous expenses.One customer gave her use of his vacation home for a week (worth $2,500) in exchange for Halie allowing his child to attend the day care center free of charge.Halie accounts for her business activities using the cash method of accounting.

o.Joe's employer pays the couple's annual health insurance premiums of $9,500 for a qualified plan.