James and Kate Sawyer were marred on New Year's tve of 2021. Betore ther matriage, Kate lived in New York and worked as a hair stylist for one of the city's top salons, James lives in Atianta, where he works for a public accounting firm earning an annual salary of $100,500. After their marriage, Kate left her job in New York and moved into the couple's newly purchased, 3,200-square-foot home in Ationto. Kate incurred $2,250 of movirg expenses. The couple purchased the home on January 3,2022 , by peying $100.000 down and obtaining a $400.000 mortgoge for the remaindet. The interest rate on this loan was 3 percent, and the Sowyers made interestonly payments on the loan through June 30. 2022 (assume they paid exacty one-hal of a year's worth of interest on this ioan by June 30). On July 1. 2022, the Sawyers borrowed an additional 560,000 , secured by the home, in order to make home improvements (the Ioan was called a "home equity loan" by the lender). The interest rate on the loan was 3 percent (acsume they paid oxactly one-ha f of a year's worth of interest on this loan by year-end. Shortly after moving into the new home, Kate staned a new business called Kate's Beauty Cuts LLC. She set up shop in a 38450uare foot corner room of the couples home and began to get it ready for business. The room conveniently had a door to the outside. providing customers direct occess to the shop. Kate poid $2.120 to have the carpet replaced with a tile floor. She also paid $1.210 to have the room pointed with vibrant colors and $660 to hove the room rewired for appropriste lighting. Kote ran an ad in the local newspaper and officially opened her shop on January 24,2022. By the end of the year, Kate's Beauty Cuts LLC generated $40.200 of net income before considering the home offce deduction. The Sawyers incurred the following home-related expenditures during 2022: - $4.250 of resl property laxes - $2025 for homeowners insurance. - $2.450 for electricity. - $1.550 for gos and other utilities. They determined depreclation expense for their entire nouse was $17.450. Also, on March 2 Kate was able to finally sell her one-bedroom Marhatzan condominium for $478,500.$4 purchased the condo, which she had lived in for slix years prior to her marriege, for $206,000 Kate owns a vacation home in Myrte Beach. South Carolina. She purchased the home several years ago, largely as an investment. To help cover the expenses of maintaining the home, James and Kate decided to rent the home out. They rented the home for a total of 106 days at fair market value (this included 8 dsys that they rented the home to James's brother Jacks. in adoition to the 106 doys. Kate allowed a pood friend and customer, Clair, to stay in the home for half-price for two days. James and Kase stayed in the home for 6 days for a romantic getawiy and another 3 days in order to do some repalr and maintenance work on the home. The rental revenues from the nome in 2022 were $18,440. The Sawyers incurred the following expenses associsted with the home: - $9,740 of interest \{assume not limited by acquisition cebt limit) - \$3,390 of real property taves. - $1,910 for homeowner's insurance. - $1210 for electricity. - \$1.610 for gas, other unilities, and landscaping. - \$5.225 for depreciation. Requlred: Determine the Sawyers' taxabie income for 2022 Dieregord selfemployment taves and the qualifed businesa income deduction. Assume the couple paid $4,410 in state income taxes and files a joint return. For determining deductible home office exoenees and allocating expenses to the rental, the Sawyers would like to use the methods that minimize their overall taxable income for the yeat. Note: Do not round ony division, Round other Intermedlate celculations to the neerest whole dollar amount. Assume 3os deys in the eurrent year. James and Kate Sawyer were marred on New Year's tve of 2021. Betore ther matriage, Kate lived in New York and worked as a hair stylist for one of the city's top salons, James lives in Atianta, where he works for a public accounting firm earning an annual salary of $100,500. After their marriage, Kate left her job in New York and moved into the couple's newly purchased, 3,200-square-foot home in Ationto. Kate incurred $2,250 of movirg expenses. The couple purchased the home on January 3,2022 , by peying $100.000 down and obtaining a $400.000 mortgoge for the remaindet. The interest rate on this loan was 3 percent, and the Sowyers made interestonly payments on the loan through June 30. 2022 (assume they paid exacty one-hal of a year's worth of interest on this ioan by June 30). On July 1. 2022, the Sawyers borrowed an additional 560,000 , secured by the home, in order to make home improvements (the Ioan was called a "home equity loan" by the lender). The interest rate on the loan was 3 percent (acsume they paid oxactly one-ha f of a year's worth of interest on this loan by year-end. Shortly after moving into the new home, Kate staned a new business called Kate's Beauty Cuts LLC. She set up shop in a 38450uare foot corner room of the couples home and began to get it ready for business. The room conveniently had a door to the outside. providing customers direct occess to the shop. Kate poid $2.120 to have the carpet replaced with a tile floor. She also paid $1.210 to have the room pointed with vibrant colors and $660 to hove the room rewired for appropriste lighting. Kote ran an ad in the local newspaper and officially opened her shop on January 24,2022. By the end of the year, Kate's Beauty Cuts LLC generated $40.200 of net income before considering the home offce deduction. The Sawyers incurred the following home-related expenditures during 2022: - $4.250 of resl property laxes - $2025 for homeowners insurance. - $2.450 for electricity. - $1.550 for gos and other utilities. They determined depreclation expense for their entire nouse was $17.450. Also, on March 2 Kate was able to finally sell her one-bedroom Marhatzan condominium for $478,500.$4 purchased the condo, which she had lived in for slix years prior to her marriege, for $206,000 Kate owns a vacation home in Myrte Beach. South Carolina. She purchased the home several years ago, largely as an investment. To help cover the expenses of maintaining the home, James and Kate decided to rent the home out. They rented the home for a total of 106 days at fair market value (this included 8 dsys that they rented the home to James's brother Jacks. in adoition to the 106 doys. Kate allowed a pood friend and customer, Clair, to stay in the home for half-price for two days. James and Kase stayed in the home for 6 days for a romantic getawiy and another 3 days in order to do some repalr and maintenance work on the home. The rental revenues from the nome in 2022 were $18,440. The Sawyers incurred the following expenses associsted with the home: - $9,740 of interest \{assume not limited by acquisition cebt limit) - \$3,390 of real property taves. - $1,910 for homeowner's insurance. - $1210 for electricity. - \$1.610 for gas, other unilities, and landscaping. - \$5.225 for depreciation. Requlred: Determine the Sawyers' taxabie income for 2022 Dieregord selfemployment taves and the qualifed businesa income deduction. Assume the couple paid $4,410 in state income taxes and files a joint return. For determining deductible home office exoenees and allocating expenses to the rental, the Sawyers would like to use the methods that minimize their overall taxable income for the yeat. Note: Do not round ony division, Round other Intermedlate celculations to the neerest whole dollar amount. Assume 3os deys in the eurrent year