a. 59. Comprehensive Problem (Tax Return Problem). Kevin Korda, age 35, married Emily, age 30, during 2020. Kevin pays alimony of $1,000 a month under a divorce decree from 2016, and provides $7,200 a year in support for his son from a previous marriage. The son lives with Kevin's ex-wife, who provides $3,000 a year in support. During 2020, Kevin earned $45,000 and Emily earned $38,000 at her regular job. Kevin and Emily paid $4,800 state income taxes, $3,800 property taxes on their home, $15,000 charitable contributions, $8,400 interest on their home mortgage, and $3,000 medical expenses. In addition, they had the following transactions during 2020: Kevin sold for $34,000 property which he had received from his father. His father's basis in the property at the time of the gift was $35,000 and the fair market value was $30,000. b. Kevin sold his personal use automobile (adjusted basis of $25,000) for $15,000 and purchased a new car for $28,500. Emily received $300 in dividends from the 50 shares of $10 par common stock which she owns. The stock has an adjusted basis of $1,400 to Emily and was purchased on April 28, 2020. On July 19, 2020, she also received 50 nontaxable stock rights with a fair market value of $5 when the fair market value of the stock was $30 per share. Five rights plus $20 entitle her to one share of common stock. On October 24, 2020, she exercised 30 of the rights and sold the other 20 for $100. C. Webster Corp. d. Kevin and Emily purchased 50 shares of Waverly Corp. stock for $35 a share on April 18, 2020. On May 19, 2020, they purchased 30 more shares for $45 each and on June 16, 2020, they purchased 20 shares for $50 each. On August 11, 2020, they sold 75 shares for $4,500. Compute Kevin and Emily's taxable income. Treat any gain as ordinary income. a. 59. Comprehensive Problem (Tax Return Problem). Kevin Korda, age 35, married Emily, age 30, during 2020. Kevin pays alimony of $1,000 a month under a divorce decree from 2016, and provides $7,200 a year in support for his son from a previous marriage. The son lives with Kevin's ex-wife, who provides $3,000 a year in support. During 2020, Kevin earned $45,000 and Emily earned $38,000 at her regular job. Kevin and Emily paid $4,800 state income taxes, $3,800 property taxes on their home, $15,000 charitable contributions, $8,400 interest on their home mortgage, and $3,000 medical expenses. In addition, they had the following transactions during 2020: Kevin sold for $34,000 property which he had received from his father. His father's basis in the property at the time of the gift was $35,000 and the fair market value was $30,000. b. Kevin sold his personal use automobile (adjusted basis of $25,000) for $15,000 and purchased a new car for $28,500. Emily received $300 in dividends from the 50 shares of $10 par common stock which she owns. The stock has an adjusted basis of $1,400 to Emily and was purchased on April 28, 2020. On July 19, 2020, she also received 50 nontaxable stock rights with a fair market value of $5 when the fair market value of the stock was $30 per share. Five rights plus $20 entitle her to one share of common stock. On October 24, 2020, she exercised 30 of the rights and sold the other 20 for $100. C. Webster Corp. d. Kevin and Emily purchased 50 shares of Waverly Corp. stock for $35 a share on April 18, 2020. On May 19, 2020, they purchased 30 more shares for $45 each and on June 16, 2020, they purchased 20 shares for $50 each. On August 11, 2020, they sold 75 shares for $4,500. Compute Kevin and Emily's taxable income. Treat any gain as ordinary income