Tim and Monica Nelson are married, file a joint return, and are your newest tax clients.
They provide you with the following information relating to their 2011 tax return:
1. Tim works as a pediatrician for the county hospital. The W-2 form he received from the hospital shows wages of $150,000 and state income tax withheld of $8,500.
2. Monica spends much of her time volunteering, but also works as a substitute teacher for the local schools. During the year, she spent 900 hours volunteering. When she does not volunteer, she earns $8.00 per hour working as a substitute. The W-2 form she received from the school district shows total wages of $3,888 and state income tax withheld of $85.
3. On April 13, the couple paid $250 in state taxes with their 2010 state income tax return. The Nelsons' state and local sales taxes in 2011 were $5,500.
4. On December 18, the Nelsons donated a small building to the Boy Scouts of America.
5. They purchased the building three years ago for $80,000. A professional appraiser determined that the fair market value of the home was $96,000 on December 12.
6. Tim and Monica both received corrective eye surgery, at a total cost of $3,000. They also paid $1,900 in health insurance premiums.
7. On June 1, the couple bought a car for $16,000, paying $4,000 down and borrowing $12,000. They paid $750 total interest on the loan in 2011.
8. On June 10, the Nelsons took out a home equity loan of $20,000 to expand their home. They paid a total of $850 interest with their monthly payments on the loan.
9. The Nelsons paid a total of $2,300 interest on their original home loan. They sold stock in Cabinets, Inc. for $5,200, which they purchased for $7,900 in March of the current year. They also sold stock in The Outdoor Corporation for $12,500, which they purchased several years ago for $8,600.
10. Tim incurred the following expenses related to his profession, none of which were reimbursed by his employer:
• Subscriptions to medical journals $400
• American Medical Association (AMA) annual membership fee $250
11. During the year, the couple paid their former tax advisor $700 to prepare their prior year tax return.
12. The Nelsons do not have children, and they do not provide significant financial support to any family members.
Task:
Compute the Nelson's taxable income for 2011.