The following events take place in 2021. Phil is a 51-year-old professional golfer married to 49-year-old Amy who he met when she was a cheerleader for the Phoenix Suns. Phil and Amy have two daughters, Amanda, aged 22 and Sophia, aged 20. They also have a son Evan, aged 18. They completely support all three children. Phil won the PGA championship prize money of $2.16 million. He also received $ 1.42 million in other prize money. Phil incurred significant travel costs to play the tour. He had transportation costs of $ 72,000, hotel costs of $ 101,000 and meal costs of $ 11,000. He has adequate documentation for these expenses. Phil also earned income from endorsements during the year of $ 40.8 million. He had to pay his agent 3% of his endorsement income as a fee. Phil also pays his financial advisor $ 900,000 for advice on investing and saving. Phil and Amy had a $ 45,600 short-term capital loss from the prior year. During the year, Amy sold 1,500 shares of BP for $ 37,500. She had bought the shares four years earlier for $ 40,000. Ten days after the sale, Amy bought 1,000 shares of BP for $ 25,000. During the year, Phil sold a state of Arizona general obligation bond that he had purchased 18 months earlier for a $3,500 gain. Phil and Amy received $ 1,500 in interest on Treasury Bills, $ 45,000 interest on state of Arizona general obligation bonds and $ 24,500 in interest from bonds issued by Calgary, Alberta, Canada. They also received $ 13,000 in dividends from the Fidelity High Yield Municipal Bond Fund. $ 12,700 of distribution represented tax-free income and the rest long-term capital gain. Phil and Amy own a home in Rancho Santa Fe, California. Their mortgage was paid off but they paid $ 78,000 in property taxes to San Diego County. Phil and Amy donated $ 450,000 in cash to various charities during the year. Phil also donated to PGA Charities, 10 hours of golf lessons by him valued at $7,500. During the year, Phil and Amy paid $ 2,300,000 in California state income tax.
A. Compute Phil and Amy’s adjusted gross income
B. Compute Phil and Amy’s Taxable Income
C. Compute Self-Employment tax (not including Additional Medicare Tax) owed by Phil
