In $2023,$ Sterling and Lana Archer $($ages $31$ and $29)$ are married and live in New York, NY$.$ Their address is $8805$th Ave Unit $22$A$,$ New York, NY $10021.$ They have a two$-$year$-$old child, AJ$.$ Their phone number is $212-123-4567.$ Sterling, Lana and AJ$$s social security numbers are $123-45-6789,234-56-7891$ and $345-67-8912$ respectively.

Sterling received $$8,000$ of qualified Microsoft dividends, as well as $$5,000$ of non$-$qualified dividends from Xerox. Sterling also received $$5,000$ of interest from City of New York bonds, and $$10,000$ of interest from Proctor & Gamble bonds. The remaining income came from their own business. Sterling and Lana both run Clandestine Operations $($CO$)$ as a calendar year end, cash basis, schedule C company $($EIN $98-7654321).$ CO was formed in $2016,$ and only sells its services $($no inventory$).$ In $2022,$ CO had $$3,257,000$ of revenue. The Archer$$s also listed the following expenses:

$-$$$36,000$ to lease their office at $9006$th Ave, New York, NY $10021.$

$-$$$500,000$ in employee wages

$-$$$45,000$ in payroll taxes

$-$$$50,000$ in health insurance premiums for CO employees

$-$$$10,000$ in health insurance premiums for the Archer family

$-$$$15,000$ in business loan interest

$-$$$5,000$ in legal fees

$-$$$25,000$ in new supplies

$-$$$15,000$ in utilities

Further, CO gave more detailed information on the following items:

$-$Travel Expenses: Sterling estimates their personal family vehicle $($Acura RDX$)$ was driven $8,000$ miles for qualifying overnight business trips, but only documented $3,457$ of those miles $($standard mileage rate is $65\mathrm{.}5$ cents$).$ Sterling also saved gas receipts totaling $$600,$ toll receipts totaling $$350,$ parking fines totaling $$1,300,$ and food receipts totaling $$3,000.$ The Archer$$s also flew to two locations for business. The first was a $7-$day trip to Miami, FL$,$ and the second a $5-$day trip to Aspen, CO$.$ Per discussions with Sterling, business was only conducted for $5$ of the $7$ days in Miami, with the other two days spent lounging on South Beach. CO paid $$3,200$ for two first class tickets to Miami, $$300$ per night for a hotel, $$220$ in taxi fares to get to and from business meetings, and $$574$ for meals. On the second trip, business was only conducted on $2$ of the $5$ days. CO paid $$2,800$ for two first class tickets to Aspen, $$250$ per night for a hotel, $$130$ in taxi fares to get to and from business meetings, and $$350$ for meals.

$-$Depreciable Assets: CO currently owns various office furniture put in service on March $1$st$,2021$ when CO opened for business. The office furniture has a total original cost of $$25,000.$ CO also owns $5$ computers, also placed in service on March $1$st$,2021,$ with a total original cost of $$10,000.$ Further, $2$ new computers were purchased in $2023$ and placed in service on September $1$st$,$ with a total cost of $$4,000.$ CO purchased a $2019$ Ford Escape for $$22,000,$ also placed in service on March $1$st$,2021.$ CO also owns a warehouse on the outskirts of town for storage. The warehouse had an original cost of $$250,000$ and was placed in service on March $1$st$,2021.$ No section $179$ or bonus depreciation was taken in prior years. However, the Archers would like to fully utilize any available $179$ or bonus depreciation on new assets placed in service during $2023.$

Sterling also informed you of the following personal information:

$-$Paid $$7,500$ of unreimbursed medical expenses

$-$Paid $$20,450$ of state and local income taxes

$-$Paid $$4,250$ in property taxes

$-$Paid $$102,000$ in home related interest $(6\%$ interest on a $$1,500,000$ acquisition mortgage and $6\%$ interest on a $$200,000$ home equity loan $[$proceeds used for home renovation$]).$ The home was purchased on $1/1/2022,$ and the average loan balance for the year was $$1,500,000.$

$-$Donated $$50,000$ to NYU, Sterling$$s Alma Mater, and artwork with a basis of $$100,000$ and a FMV of $$500,000$ to The Metropolitan Museum of Art

$-$Sterling is divorced from his first wife $($SS# $456-78-9123),$ with whom he has a $5-$year$-$old child $($the child resides with the mother year$-$round, and the mother takes all possible tax benefits related to the child$).$ Sterling pays a court ordered $$12,000$ annually as part of the divorce agreement, with this amount decreasing to $$4,000$ annually when the child turns $18$ years old. The divorce decree is dated $2/3/2019.$

$-$The Archers made four $$180,000$ quarterly estimated tax payments, which exceeded $110\%$ of the prior year tax liability.

$-$The Archers paid $$20,000$ in childcare necessary for both parents to work.

The last item Sterling informs you of is a rental property they own in Destin, FL$.$ The address is $631$ Gulf Shore Drive, Destin FL $32541.$ The property was purchased November $1$st$,2011$ with an original cost of $$400,000.$ This property is rented year$-$round. While Emerald Coast Realty is engaged as a property manager to manage the bulk of the rental work, Lana participates enough to be considered an active participant of the rental. In $2023,$ the property rented for $$1,800$ per month, an appropriate FMV$,$ with $10\%$ of each rent check being taken as property management fees.