Kelly and Chanelle Chambers, ages 47 and 45, are married and live at 584 Thoreau Drive, Boston, MA 59483. Kellys Social Security number is 111-11-1111 and Chanelles is 222-22-2222. The Chambers have two children: Emma, age 23, and Chet, age 19. Their Social Security numbers are 333-33-3333 and 444-44-4444, respectively. Emma is a single college student and earned $8,000 during the summer. Kelly and Chanelle help Emma through school by paying for her room, board, and tuition. Emma lives at home during the summer. Chet has a physical handicap and lives at home. He attends a local university and earned $4,000 working for a marketing firm. In sum, Kelly and Chanelle provide more than 50% of both Emmas and Chets total support for the year. Kelly is a commercial pilot for a small airline. His salary is $95,000, from which $19,000 of federal income tax and $8,000 of state income tax were withheld. Kelly also pays premiums for health, disability, and life insurance. $2,000 of the premium was for health insurance, $250 for disability, and $400 for life insurance. Chanelle owns Alliance Networks, a proprietorship that does network consulting. During the year, Chanelles gross revenues were $23,000. She incurred the following ex-penses in her business: Liability insurance $ 700 Software rental 5,400 Journals and magazines 150 Training seminars 1,200 Supplies 1,300 Donations to a political campaign fund Kelly enjoys playing guitar and plays in a band. Kellys band has developed a local following. This year, his gross revenues were $1,200 for playing shows and $700 on CD sales. He incurred the following expenses: Studio rent expense $1,300 Sound system repairs 200 CD production 500 New guitar and amplifier 800 Kellys father passed away during the year. Kelly and Chanelle received $100,000 from the life insurance policy. Neither Kelly nor Chanelle paid any of the premiums. Chanelle purchased 100 shares of Thurston Co. stock on May 1, 1993, for $1,000. Thurston Co. was declared bankrupt during the current year. Chets physician recommended that he see a physical therapist to help with his dis-ability. Kelly paid the therapist $7,000 during the year because his insurance would not cover the bills. Kelly and Chanelle went to Las Vegas and won $5,000 at the blackjack table. The next night, they lost $6,000. Kelly and Chanelle gave $900 to their church and, during the year, they had the fol-lowing other income and expenses: Real estate taxes $1,400 Property taxes on car (determined by value) 500 Home mortgage interest 9,000 Credit card finance charges 2,600 Tax return preparation fees ($600 is allocable to Chanelles business) 1,000 Sales tax on purchases during the year 6,200 Interest from a savings account 800 Interest from City of Boston Bonds 700 Dividend from 3M stock 400 Prepare Kelly and Chanelles tax return Form 1040 and Schedules A, B, C, D