Lena Ling is a physical therapist with a local medical group. Her salary is 114,000. Lena's employer does not provide a retirement plan so she has contributed 5,500 to a traditional IRA. Her job is very stressful so she relaxes by knitting sweaters. She makes no attempt to sell her sweaters, but occasionally friends or relatives will purchase some to give as gifts. During the year she collected 2,600 from the sales of these items. The cost of her supplies for the year was 4,700.

Lena is married, and her husband, Louis, is a self-employed electrician. His revenues for the year are 66,000. Various expenses for supplies amount to 15,000.

The Lings have had mixed results with their investments. Two years ago, they invested 22,000 to acquire a 15% ownership interest in a new corporation started by another friend. Unfortunately, the company filed for bankruptcy in April, and there is no possibility of any recovery for shareholders. They bought Blue Apron stock 10 months ago, purchasing it for 9,000, and then selling it recently for 1,000. The Lings did receive 4,200 of savings account interest, 1,800 of dividends from Hershey Corp. and a 3,400 long-term gain from a mutual fund. This year they purchased silver bars for investment purposes. Due to some liquidity problems, they borrowed for this purchase and paid 6,600 in interest expense. This interest will probably continue for several more years.

Four years ago the Lings invested in a pet spa (Pet-icure LLC). The LLC is treated as a partnership for tax purposes, and the Lings are simply investors. Their share of the LLC's taxable loss this year is 5,700, although they did receive a cash distribution of 1,000. Three years ago they Lings bought a small apartment building which they rent out. The Lings have not been there since the acquisition and use an agent to manage it, but they do reserve final decision on expenditures. The agent reports the following results:

Rental receipts Mortgage payments (princ 1,000;int 8,500) Property taxes Agent commissions Repairs Depreciation

14,000 9,500 5,000 1,500 3,000 3,500

Other expenditures include: home mortgage interest-12,000; real estate taxes-4,000; state income tax withholding-9,000(actual state tax liability will be 7,000); tax return preparation-1,700; Lenas professional society dues700; safety deposit box rental (for storage of precious metals)- -100; legal fees for DUI charge-4,000 (Louis was acquitted); contributions to American Red Cross-40 sh of stock, cost 8,000 in 2013, FMV 13,000.

REQUIRED: Compute taxable income and the tax liability (ignore self-employment tax). List any carryovers. HintSec 469 deduction is applied before the Sec 219 deduction.. Use posted template.