John Casper (42 years old) and Mary Casper (44 years old) are married and they file jointly.They have 2 sons, Michael and Joel.Michael is 17 years old and attends college full time.Joel is 8 years old.John is a travelling salesperson for a company that reimburses employee business expense under an accountable plan.John is not covered by an employer sponsored retirement plan.

Mary is an emergency room nurse in a local hospital and she is covered by employer retirement plan.

Caspers own a condo that was rented for 90 days and used personally for 30 days in 2016.

Mary also has a business of making and selling jewelry.She uses her basement to store materials, to make jewelry and to meet customers.Basement has an area of 300 sq.ft and total area of the house is 2400 sq.ft.

Caspers also do investment in stock market and get income from these investments and also incur expenses in relation to the investments.

Johns father died 6 years ago and John was the beneficiary of the life insurance on father.The insurance amount was $200,000.John opted to receive $15,000 per year for 20 years at the time of fathers death.

The following is the financial information for 2016.

1.Total salary$110,000

2.Investment income16000( all are ordinary dividends)

3.Interest from municipal bonds2200

4.Rental income from condo12000

5.Entire year expenses related to condo are $6000 of mortgage interest, 2000 for tax, 1000 for insurance, 800 for repairs, 1000 for utilities, and 4000 of depreciation.

6.Revenue from jewelry business18000

7.Materials and delivery expense for jewelry5000;

8.Expenses for whole house:5500 for mortgage interest, 2800 for tax, 1600 for utilities, 500 for insurance, and 2000 for depreciation.

9.Michael received scholarship of $20000, and all amount was paid for tuition.In addition they took a student loan and paid $800 student loan interest.Total education expense was $36,000.

10.Investment related expenses paid: $7000 interest, $2000 advisor fee and $400 for safe box rent.

11.John incurred the following business expenses:$1800 for travel, $600 for taxi, $2400 for hotel, $500 for meals and entertainment.His employer reimbursed him $4000.

12.John had a gambling income of $8000 and gambling loss of $6000.

13. Other amounts paid in 2016:

a.Alimony to Johns ex-wife $12000

b.State and local income tax11,500

c.Out of pocket medical expenses5,200

d.Medical miles driven2100

e.Charity: 2000 to a local church, 1500 to Johns alma mater, 800 to Red Cross and 2200 to Presidential election fund.

f.Federal income tax withheld from Johns and Marys salary = $15,800

Calculate the following:

a.Gross income

b.Deductions for AGI

c.Adjusted gross income

d.Total itemized deduction or standard deduction (which ever that would result in lower taxable income)

e.Total taxable income

f.Total tax liability

g.Tax due or refund.