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Paul and Donna Decker are married taxpayers, ages 44 and 42, respectively, who file a joint return for 2022. The Deckers live at 1121 College Avenue, Carmel, IN 46032. Paul is an assistant manager at Carmel Motor Inn, and Donna is a teacher at Carmel Elementary School. They present you with W2 forms that reflect the following information:

Paul Donna Salary $68,000 $56,000 Federal tax withheld 6,770 6,630 State income tax withheld 1,400 1,100 FICA (Social Security and Medicare) withheld 5,202 4,284 Social Security numbers 111-11-1112 123-45-6789

Donna is the custodial parent of two children from a previous marriage who reside with the Deckers through the school year. The children, Larry and Jane Parker, reside with their father, Bob, during the summer. Relevant information for the children follows:

Larry Jane Age 17 18 Social Security numbers 123-45-6788 123-45-6787 Months spent with Deckers 9 9

Under the divorce decree, Bob pays child support of $150 per month per child during the nine months the children live with the Deckers. Bob says that he spends $200 per month per child during the three summer months they reside with him. Donna and Paul can document that they provide $2,000 of support per child per year. The divorce decree is silent as to which parent can claim the exemptions for the children.

In August, Paul and Donna added a suite to their home to provide more comfortable accommodations for Hannah Snyder (Social Security number 123-45-6786), Donnas mother, who had moved in with them in February 2021 after the death of Donnas father. Not wanting to borrow money for this addition, Paul sold 300 shares of Acme Corporation stock for $50 per share on May 3, 2022, and used the proceeds of $15,000 to cover construction costs. The Deckers had purchased the stock on April 29, 2017, for $25 per share. They received dividends of $750 on the jointly owned stock a month before the sale.

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