Kara [SSN 587-64-5235]and Brandon [SSN 588-54-8623] Arnold are married and file a joint income tax return.They have one son, Henry [SNN 587-45-3197], age 3.Their address is 356 Welcome Lane, Woodbury, WA 84653.They report all their income and expenses on the cash method.

Their personal tax items during the tax year include:

Salaries combined

$103,000

Interest income from money market accounts

600

Dividend income from Davis Corp. stock (qualified)

700

Cash contributions to church

6,000

Rental of a condominium in Lutsen, WA

Rental income (assume half was from cash or check and half was from credit cards)

12,000

Interest expense

7,000

Property taxes

3,200

Maintenance

1,700

Depreciation (entire year)

7,500

Insurance

2,000

Days of personal use

16

Days of rental use

30

The following items also occurred during the tax year:

In 2005, Brandon hadloaneda friend $3,000 to help pay medical bills.During the tax year he discovers that his "friend" flunked out of medical school has skipped town.No paperwork was ever signed.

On June 20 of the tax year, Brandon sells Kim Corporationstockfor $16,000.he purchased the stock on December 12, 2004 for $22,000.

On September 19 of the tax year, Kara discovers that the pennystockof Roberts, Inc. she purchased on January 2 of the same year is completely worthless.She paid $5,000 for the stock.

Instead of accepting the $60 the utility store offers for their old dishwasher, theydonateit to Goodwill on November 21 of the tax year

Complete schedules A, E & D. Form 1040, 8949 and 8283