Problem $2-$ Appendix F:

Complete in ProConnect

Gunnar B$.($age $42)$ and Hannah R$.($age $48)$ Ferguson are

married and live at $5944$ Overhill Road, Council Bluffs, IA $51503$

$($a suburb of Omaha$).$ Gunnar is a chemist employed by BAC

Pharmaceuticals, Inc., and Hannah is a self$-$employed doctor of

anesthesiology. They are calendar$-$year, cash$-$basis taxpayers.

BAC Pharmaceuticals develops and produces injectable

medicines used in chemotherapy treatments for cancer

patients. Gunnar's Form W$-2$ from BAC reports taxable

wages of $$91,180$ which is comprised of the following

items. Gunnar manages the Omaha facility for an annual

salary of $$95,000.$ BAC makes contributions to a qualified

defined contribution pension plan for all its full$-$time

employees which are not included in current

compensation. Although Gunnar could make

contributions into the plan, he chose not to do so in $2022.$

Gunnar participates in his employer's group health

insurance plan to which he contributed $$4,000$ in $2022$ for

medical coverage. These contributions are made with pre$-$

tax dollars, so his taxable salary is reduced by $$4,000.$ The

health plan covers Gunnar, Hannah, and their two

dependent children. Because of the risk associated with

Gunnar's work $($i$.$e$.,$ processing of chemotherapy drugs$),$

BAC provides all its employees with $$200,000$ of group

term life insurance coverage. An additional $$180$ of

income is included in Gunnar's Form W$-2$ to report the

taxable value of this insurance. Gunnar's Form W$-2$ from

BAC also reflects income tax withholding of $$6,500$ for

Federal income taxes and $$4,000$ for state of Iowa income

taxes.