John and Grace (both age 47) are married and file a joint tax return. 2017 income includes:
1. Salary of $200000
2. Grace was in a car accident and received compensatory damages of $25000 for her broken nose
3. Grace also received punitive damages of $15000; the person who hit her car was drunk
4. Interest income from Apple bonds in amount of $1000
5. Refund of 2016 NJ income taxes of $2000 (couple itemized their deductions in 2016; itemized deductions exceeded standard deduction by $5000)
John and Grace also incurred and paid the following expenses during year:
6. Medical expenses $7000
7. Parking tickets $300
8. Alimony (John was previously married and paid alimony to his ex-wife) $12000
9. Legal fees associated with divorce proceedings-not tax related $4000
10. Charitable contributions-paid on Dec. 30 2017 w/ a credit card $2000
11. Casualty loss (after $100 floor, but before any further limitations) $1000
12. Mortgage payment on principal residence: principal only $10000
13. Mortgage payment on principal residence: interest expense $14500
14. Property taxes (real estate taxes) on personal residence $4200
15. Nephew, Victor, owns a home and could not make his property tax payment as he is unemployed. Grace paid his property taxes (real estate taxes) $3000
16. Federal income tax withheld $18000
17. Qualified moving expenses in conjunction with a new job $2000
18. Contributions to traditional IRA $4000
19. Cost of new roof on personal residence $14000
20. NJ income tax withheld $1300
Using the Tax formula, beginning with Income Broadly Conceived, provide a detailed calculation of the couple's 2017 taxable income. Your answer must follow the the tax formula. Be certain to compare the standard deduction to total itemized deductions.