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Diana and Ryan Workman were married on January $1$ of last year. Ryan has an eight$-$year$-$old son, Jorge, from his previous

marriage. Diana works as a computer programmer at Datafile Incorporated $($DI$)$ earning a salary of $$96,000.$ Ryan is self$-$

employed and runs a day care center. The Workmans reported the following financial information pertaining to their

activities during the current year.

a$.$ Diana earned a $$96,000$ salary for the year.

b$.$ Diana borrowed $$12,000$ from DI to purchase a car. DI charged her $2$ percent interest $($ $$240)$ on the loan, which Diana

paid on December $31.$ DI would have charged Diana $$720$ if interest had been calculated at the applicable federal

interest rate. Assume that tax avoidance was not a motive for the loan.

c$.$ Ryan received $$2,000$ in alimony and $$4,500$ in child support payments from his former spouse. They divorced in $2016.$

d$.$ Ryan won a $$900$ cash prize at his church$-$sponsored Bingo game.

e$.$ The Workmans received $$500$ of interest from corporate bonds and $$250$ of interest from a municipal bond. Ryan

owned these bonds before he married Diana.

f$.$ The couple bought $50$ shares of ABC Incorporated stock for $$40$ per share on July $2.$ The stock was worth $$47$ a share

on December $31.$ The stock paid a dividend of $$1\mathrm{.}00$ per share on December $1.$

g$.$ Ryan's father passed away on April $14.$ He inherited cash of $$50,000$ from his father and his baseball card collection,

valued at $$2,000.$ As the beneficiary of his father's life insurance policy, Ryan also received $$150,000.$

h$.$ The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $$1,200.$

i$.$ Diana received $$400$ cash for reaching $10$ years of continuous service at DI$.$

j$.$ Diana was hit and injured by a drunk driver while crossing a street at a crosswalk. she was unable to work for a month.

She received $$6,000$ from her disability insurance. DI paid the premiums for Diana, but it reported the amount of the

premiums as compensation to Diana on her year$-$end W$-2.$

k$.$ The drunk driver who hit Diana in part $($j$)$ was required to pay her $$2,000$ medical costs, $$1,500$ for the emotional

trauma she suffered from the accident, and $$5,000$ for punitive damages.

I. For meeting her performance goals this year, Diana was informed on December $27$ that she would receive a $$5,000$

year$-$end bonus. DI $($located in Houston, Texas$)$ mailed Diana's bonus check from its payroll processing center $($Tampa$,$

Florida$)$ on December $28.$ Diana didn't receive the check at home until January $2.$

m$.$ Ryan is a $10$ percent owner of MNO Incorporated, a Subchapter S corporation. The company reported ordinary business

income for the year of $$92,000.$ Ryan acquired the MNO stock two years ago.

n$.$ Ryan's day care business collected $$35,000$ in revenues. In addition, customers owed him $$3,000$ at year$-$end. During

the year, Ryan spent $$5,500$ for supplies, $$1,500$ for utilities, $$15,000$ for rent, and $$500$ for miscellaneous expenses.

One customer gave him use of their vacation home for a week $($worth $$2,500)$ in exchange for Ryan allowing their child

to attend the day care center free of charge. Ryan accounts for his business activities using the cash method of

accounting.

o$.$ Diana's employer pays the couple's annual health insurance premiums of $$5,500$ for a qualified plan.