Question

George Large (SSN 000-11-1111) and his wife Marge Large (SSN 000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 and want you to prepare their 2017 income tax return based on the information below: George Large worked as a salesman for Toyboat, Inc. He received a salary of $80,000 ($8,500 of federal income taxes withheld and $1,800 of state income taxes withheld) plus an expense reimbursement from Toyboat of $5,000 to cover his employee business expenses. George must make an adequate accounting to his employer and return any excess reimbursement, none of the reimbursement was related to the meals and enter- tainment. Additionally, Toyboat provides George with medical insurance worth $7,200 per year. George drove his car a total of 24,000 miles during the year, and he placed the car in service on June 1, 2015. His log indicates that 18,000 miles were for sales calls to customers at the customers' offices and the remainder was personal mileage. George uses the standard mileage rate method. George is a college basketball fan. He purchased two season tickets for a total of $4,000. He takes a customer to every game, and they discuss some business before, during, and after the games. George also takes clients to business lunches. His log indicates that he spent $1,500 on these business meals. George also took a five-day trip to the Toyboat headquarters in Musty, Ohio. He was so well-prepared that he finished his business in three days, so he spent the other two days sightseeing. He had the following expenses during each of the five days of his trip: Airfare $200 Lodging $85/day Meals $50/day Taxicabs $20/day Marge Large is self-employed. She repairs rubber toy boats in the basement of their home. The total square footage of the Larges' home, including the basement, is 3,000 square feet. The portion of the basement used in Marge's business is 750 square feet. The busi- ness code is 811490. She had the following income and expenses: Income from rubber toy boat repairs $15,000 Cost of supplies 5,000 Contract labor 3,500 Telephone (business) 500 The Larges use the simplified method to figure their deduction for Marge's business use of their home. The Larges incurred the following total other expenses: Real estate taxes 2,500 Mortgage interest 4,500 Cash charitable contributions 3,500

Complete the following forms

Answer 1

Schedule A

Medical & Dental Expenses 0

Taxes paid:

Real estate tax 2500

Interest paid:

Mortgage interest 4500

Gifts to Charity 3500

Un reimbursed Job Expenses 10905

Total Itemized deductions 21405

Form 1040:

Salary received 80000

Business Income 2789

Total Income 82789

Less : Schedule A (21405)

Total 61384

3800*2 7600

Taxable Income 53784

0-8500 (10%) 850

8500 - 34500 (15%) 3900

34500-61384 (25%) 6721

Total Tax 11471

Less: Taxes Witheld 10300

Total Tax payable 1171

Schedule C

Income from Rubber toy Boat

Repair 15000

Less

Cost of Supplies 5000

Contract Labour 3500

Business Phone calls 500

Total 6000

Less : Form 8829 Expenses (3211)

Total Business Income 2789

Form 2106

Car expenses 9990

Travelling expenses 665

Meals expenses 5500

16155

Less Reimbursements (5000)

Expenses allowed (250)

Total 10905

Form 8829

25% used for Business

Income from Business 6000

Less

Mortgage Interest 1125

Real estate taxes 625

Utility bills 500

Depreciation 961

Total 2789

Notes:

Depreciation calculation

Adjusted cost 170000

Less: Value of land 20000

150000

Basis of building 37500

Depreciation 2.56%

961.5