Required information

Comprehensive Problem $5-77($LO $5-1,$ LO $5-2,$ LO $5-3)($Algo$)$

$[$The following information applies to the questions displayed below.$]$

Dlana and Ryan Workman were married on January $1$ of last year. Ryan has an eight$-$year$-$old son, Jorge,

from hils previous marriage. Dlana works as a computer programmer at Datafle Incorporated $($DI$)$ earning a

base salary of $$100,000.$ Ryan is self$-$employed and runs a day care center. The Workmans reported the

following financlal information pertalining to their actlvitles during the current year.

a$.$ Diana earned a $$100,000$ base salary for the year $($not Including any taxable benefits$).$

b$.$ Dlana borrowed $$12,800$ from DI to purchase a car. DI charged her $2$ percent interest $($ $$256)$ on the loan,

which Dlana paid on December $31.$ DI would have charged Diana $$800$ if Interest had been calculated at

the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan.

c$.$ Ryan recelved $$2,400$ in alimony and $$5,300$ in child support payments from his former spouse. They

divorced in $2016.$

d$.$ Ryan won a $$980$ cash prize at his church$-$sponsored Bingo game.

e$.$ The Workmans recelved $$900$ of interest from corporate bonds and $$650$ of interest from a municlpal

bond. Ryan owned these bonds before he married Dalna.

f$.$ The couple bought $66$ shares of ABC Incorporated stock for $$48$ per share on July $2.$ The stock was worth

$$63$ a share on December $31.$ The stock pald a quallfled dlvidend of $$1$ per share on December $1.$

Ryan's father passed away on April $14.$ He Inherited cash of $$58,000$ from his father and his baseball card

collection, valued at $$2,800.$ As the beneficlary of his father's life insurance policy, Ryan also recelved

$$158,000.$

h$.$ The couple spent a weekend in Atlantic City in November and came home with gross gambiling winnings

of $$2,000.$

Diana recelved $$2,000$ cash for reaching $10$ years of continuous service at DL

J$.$ Diana was hit and injured by a drunk driver while crossing a street at a crosswalk. she was unable to work

for a month. She recelved $$7,600$ from her disability insurance. Di paid the $$2,000$ premlums for Diana,

and it reported the amount of the premlums as compensation to Dlana on her year$-$end W$-2.$

k$.$ The drunk driver who hit Diana in part $($J$)$ was required to pay her $$2,800$ medical costs, $$2,300$ for the

emotional trauma she suffered from the accident, and $$6,600$ for punitive damages.

I. For meeting her performance goals thls year, Diana was informed on December $27$ that she would recelve

a $$5,800$ year$-$end bonus. DI $($located in Houston, Texas$)$ malled Dlana's bonus check from its payroll

processing center $($Tampa$,$ Florida$)$ on December $28.$ Dlana didn't recelve the check at home untll January

m$.$ Ryan is a $10$ percent owner of MNO Incorporated, a Subchapter S corporation. The company reported

ordinary business income for the year of $$108,000.$ Ryan acquired the MNO stock two years ago.

n$.$ Ryan's day care business collected $$75,000$ in revenues. In addition, customers owed him $$7,000$ at year$-$

end. During the year, Ryan spent $$9,500$ for supplies, $$5,500$ for utilities, $$23,000$ for rent, and $$900$ for

miscellaneous expenses. One customer gave him use of their vacation home for a week $($worth $$6,500)$ in

exchange for Ryan allowing their chlld to attend the day care center free of charge. Ryan accounts for his

business activities using the cash method of accounting.

o$.$ Diana's employer pays the couple's annual health insurance premlums of $$9,500$ for a quallfled plan.

$1.$ Assuming the Workmans file a joint tax return, determine their total gross income, reduced by any deductible expenses from the day care business $($this is called total income on the Form $1040).$

$3.$ Assuming the Workmans live in California, a community property state, and that Diana and Ryan file separately, determine Diana's total gross income, reduced by any deductible expenses from the day care business $($this is called total income on the Form $1040).$