David and Doris Kelley were divorced on February 3, 2014. They lived apart during 2014. The divorce decree required David to make the following payments:
a. Transfer full title to their jointly owned family home to Doris. Fair market value of the home is $180,000, basis $150,000.
b. $1,000 per month mortgage payments on the house, above. The mortgage has 20 years remaining before being fully paid off, but the payments would end on her death.
c. $2,000 per month for 10 years’ support payments to Doris, of which $600 per month is child support.
d. Doris insisted that the children attend private schools. In 2014, David paid $1,500 in tuition for the children’s private high school. David paid his lawyer $5,000 to represent him in the divorce proceedings. David and Doris agreed that Doris would maintain a home for the children. Further, Doris agreed to allow David to claim one child as a dependency exemption. This agreement was put in writing and signed by Doris.
e. Besides the divorce, David has had a big year financially. He owns an apartment house and he requires each new tenant to place a $750 security deposit with him before moving into the apartment. When the tenant ultimately vacates the apartment, David will refund the deposit. In 2014, David collected $3,750 in security deposits and rental income of $15,000.
David entered a local raffle in 2014. David won first prize, which was a new automobile with a window price of $20,000. He checked with several local car dealers and was positive that if he had purchased a similar car on his own, the price would have been $18,200. David loaned his sister Lois $5,000. Lois was repaying the loan at $100 per month plus interest of $40. Since Lois was about to depart on an extended vacation on December 2, 2014, she gave David $200 plus interest of $80 to cover the months of December and January.
David has a good job that pays an annual salary of $50,000. In 2014, business was very good and in December 2014 bonuses were announced for the employees. David earned a $4,000 bonus for 2014. Bonuses would be mailed to the employees during the first week of January 2015. David has itemized deductions of $20,000.
Determine David’s 2014 taxable income.