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During 2007 Richard and Debbie, who are married and have two dependent children, have the following income and losses:

Total salaries $130,000
Bank account interest 25,000
Short-term capital gains 4,000
Short-term capital losses (1,500)

They also incurred the following expenses:

Qualified medical expenses $ 20,000
State income taxes paid 12,000
Property taxes on home 2,300
Qualified residence interest 6,000
Investment interest expense 7,500
Cash charitable contributions 80,000
Tax return preparation fees 3,600
Unreimbursed employee business expenses 20,000

Compute Richard and Debbie's taxable income for the year. (Show all calculations in good form).

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