Question - Randy and Sharon are married and have two dependent children. They also fully support Sharon's mother who lives with them and has no income. Their 2015 tax and other related information is as follows:
Total salaries - $160,000
Bank account interest income - $3,500
Municipal bond interest income - $1,500
Alimony paid to Sharon's ex-husband - $15,000
Value of employer provided medical insurance- $5,500
Value of premiums for $50,000 of group term life insurance provided by employer - $500
Dividend income from ABC stock, $2,000
Loan from Randy's parents - $5,000
Gift from Randy's parents - $15,000
Gain from the sale of qualified small business stock (§1202) held more than 5 years - $15,000
Total itemized deductions - $16,000
Compute Randy and Sharon's taxable income.