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. 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 $600 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 $3,000, which they acquired in 2005 at a cost of $1,700 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 $98,000 and they provide you with the following data: Automobile insurance $ 1,450 Homeowners insurance 625 Life nisurance 1,000 Disability insurance 375 Health insurance premiums (paid on an after-tax basis) 1,600 Country club dues 1,800 Health club dues 750 Hospital 5,000 Doctor 1,275 Massage Therapists 700 Dentists 3,750 Prescription drugs 275 Over-the-counter drugs 460 State taxes withheld 3,475 Property taxes (ad valorem) 400 Investment interest 1,600 Mortgage interest (primary residence) 6,850 Real estate taxes (primary residence) 2,240 Mortgage interest (vacation residence - unallocated) 2,700 Real estate taxes (vacation residence - unallocated) 1,350 Charitable contributions (cash; they have receipts) 7,750 Charitable contribution (clothes at FMV) 100 Subscriptions to investment journals 175 Dues to professional organizations 375 Tax prep fees 600 Investment advice 525 Parking at work 190 Safedeposit box 75