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Scenario John and Julia are married and have two children. John works as a graphic designer for a design firm and Julia is a massage

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Scenario John and Julia are married and have two children. John works as a graphic designer for a design firm and Julia is a massage therapist. She is an employee and is not self employed. They own a vacation home in Colorado that is used 30% for personal purposes (assume it is used 70% as a rental property and the income and expenses related to the rental have been accounted). During the year they receive $700 in reimbursements from their medical plan and report $5,500 of investment income (included in AGI). They contributed stock, with a fair market value of $3,150, which they acquired in 2005 at a cost of $1,800 to Ohlone College. Their gambling winnings for the year were $1,000 and are included in their adjusted gross income. Their adjusted gross income for the year is $101,000 and they provide you with the following data: Automobile insurance 1,450 Homeowners insurance 625 Life insurance 1,200 Disability insurance 475 Health insurance premiums (paid on an after-tax basis) 1,650 Country club dues 1,600 Gym membership 850 Hospital bills 5,100 Doctor bills 1,475 Aroma Therapy 700 Dentist bills 3,780 Prescription medications 295 Over-thecounter medications 470 State taxes withheld 8,350 Property taxes (ad valorem) 450 Investment interest 1, 700 Mortgage interest (primary residence) 7,050 Real estate taxes (primary residence) 2,140 Mortgage interest (vacation residence unallocated) 2,650 Real estate taxes (vacation residence unallocated) 1,520 Charitable contributions (cash; they have receipts) 7,950 Charitable contribution (clothes at FMV) 200 Subscriptions to investment journals 150 Dues to professional organizations 400 Tax prep fees 550 Investment advice 650 Parking at work 250 Safedeposit box 700

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