PART 1. Clark and Ellen Griswold are married and wish to file a joint return for 2017. They have one dependent child, Rusty (age 16), who lives with them. Their primary residence is in Flagstaff, and they own a condo (2^nd home) in Scottsdale. Clark and Ellen have the following items of income and expense for 2017:

Income:
Clarks salary	$135,000
Ellens salary	100,000
Interest income on Flagstaff School bonds	8,000
Interest income on US Treasury bonds	9,000
Qualified cash dividends	7,000
Regular (nonqualified) cash dividends	3,000
FMV of 50 shares of DF Kaye Co. common stock received as a stock dividend	12,500
Refund of 2016 Arizona income tax (the Griswolds itemized in 2016)	1,500
Net rental income from 100% owned rental house	8,000
Share of Marty Partnership loss*	(10,000)
Share of Moose S Corporation income**	50,000
Life insurance proceeds received on the death of Clarks father	100,000
Short-term capital gains	11,000
Short-term capital losses	(16,000)
28% Long-term capital gains	10,000
15% Long-term capital gains	26,000
15% Long-term capital losses	(5,000)
Expenses:
Home mortgage interest ($500,000 principal)	30,000
Home equity loan interest ($110,000 principal)	6,600
Condo loan interest ($150,000 principal)	11,500
Car loan interest	7,000
Credit card finance charges	3,000
Home property taxes	12,000
Condo property taxes	4,000
Condo maintenance fees	3,000
Car tags (ad valorem part)	2,500
Arizona income tax withheld	12,000
Arizona sales tax paid	7,000
Federal income taxes withheld	50,000
Medical insurance premiums (not part of an employer plan)	12,000
Unreimbursed medical bills	5,000
Charitable contributions	10,000
Unreimbursed employee business expenses	8,000

* Clark and Ellen invested $6,000 as limited partners in the Marty Partnership at the beginning of 2017. The loss is not the result of real estate rentals. Neither materially participate in the operations of the partnership..

** Ellen is a 50% owner and President of Moose Corp.

REQUIRED: Determine Clark and Ellens tax liability, using the tax formula. You must label your work, provide supporting schedules for summary computations, and indicate any carryovers. Present your work in a neat, orderly fashion.

PART 2. Rusty owns a mutual fund, which paid $2,600 in regular (nonqualified) dividends in 2017. Rusty also earned $3,000 from shoveling snow during the year.

REQUIRED: Determine Rusty tax liability, using the tax formula. Label all work.