Olive Onesta is a physical therapist with a local medical group. Her salary is 114,000. Olive's employer does not provide a retirement plan so she has contributed 6,000 to a Roth IRA. Her job is very stressful so she relaxes by cross-stitching wall decor. She makes no attempt to sell the wall-hangings, but occasionally friends or relatives will purchase some to give as gifts.

During the year she collected 2,900 from the sales of these items. The cost of her supplies for the year was 4,700. Olive is married, and her husband, Oscar, is a self-employed household appliance repairman. His revenues for the year are 66,000. Various expenses for supplies amount to 15,000, and he has paid 400 of dues to the Town of XX Small Business Owners Association.

The Onestas 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 a friend. Unfortunately, the company filed for bankruptcy in April, and there is no possibility of any recovery for shareholders. They bought Blue Apron stock this past March 19, purchasing 500 shares for 28.80/share, and then selling on October 8 for 6.80/share.

The Onestas did receive 3,900 of savings account interest, 1,800 of dividends from Clorox Corp. and a 4,800 long-term gain from a mutual fund. This year they purchased cryptocurrency to hold for investment purposes. Due to some liquidity problems, they borrowed for this purchase and paid 7,600 in interest expense. This interest will probably continue for several more years. Four years ago the Onestas invested in a pet spa (Pet-icure LLC). The LLC is treated as a partnership for tax purposes, and the Onestas 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 Onestas bought a small apartment building that they rent out. The Onestas have not been there since the acquisition and use a property management service, but they do reserve final decision on expenditures and oversee the manager. The management service reports the following results: Rental receipts 14,000 Mortgage payments (princ 1,000;int 8,500) 9,500 Property taxes 5,000 Property management fees 1,500 Repairs 3,000 Depreciation 3,500 Other expenditures include: home mortgage interest-10,000; real estate taxes-5,000; state income tax withholding-9,000(actual state tax liability will be 8,000); tax return preparation-1,700; Olives professional society dues700; safety deposit box rental (for storage of investment securities)--100; legal fees for DUI charge-4,0001 ; contributions to American Red Cross-40 sh of stock, cost 8,000 in 2018, FMV 13,000.

REQUIRED: Compute taxable income and the total tax liability. List any carryovers. Use the posted template. 1 Oscar has indicated that he hired the lawyer in order to protect his business. He was concerned he would lose his drivers license and then would not be able to drive to customers locations to do the work of the business, with a resulting business termination. Oscar was acquitted.