Harvey and Betty Duran, both age 37, are married with one dependent child. Determine their taxable income from the following information, and their tax liability. Both the ABC and XYZ partnerships are passive activities. Assume dividends are taxed as ordinary income.

Harvey's salary $45,000

Betty's salary 62,000

Dividends received from domestic corporations (nonqualified) 11,000

Interest 7,000

Itemized deductions 6,920

Net loss from ABC partnership (acq 1983) (14,200)

Net loss from XYZ partnership (acq 1988)

Harvey's business income (moonlighting) 7,700

Harvey's business deductions (before home office expenses 22,000

Harvey's home office expenses 10,500

Net loss on rental property (31,000)

Federal income tax withheld 9,600