Kelly is single; her dependent child, Barbara, lives with her. After her divorce, Kelly was awarded permanent custody of Barbara and has not agreed to waive her right to claim Barbara as a dependent. Kelly has the following items of income and expense:

INCOME:

Salary $ 60,000 Cash dividends 3,000 Interest income on City of New York bonds 5,000 Interest income on U.S.Treasury bills 4,000 Net rental income 3,500 Alimony received from ex-husband 2,500 Child support received from ex-husband 3,500 SALES OF CAPITAL ASSETS:

Stock held for 3 months (basis is $12,000) sold for 18,000 Investment land held 5 years (basis is $30,000) sold for 14,000 Life insurance proceeds received on the death of her mother 100,000 EXPENSES:

Home mortgage interest 6,000 Property taxes on home 2,000 Charitable contributions 7,000 Qualifying child care expense 3,700 Federal income tax withheld 8,000 Compute Kelly’s taxable income and her net tax due or refund expected for 2007.

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