George Large (SSN 000-11-111) and his wife Marge Large (SSN 000-22-222) live at

Question

George Large (SSN 000-11-111) and his wife Marge Large (SSN 000-22-222) live at 2000 Lakeview Drive,Cleveland, OH 4901 and want you to prepare their 2014 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 employer business expense. George must make an adequate accounting to his employer and return any excess reimbursement, none of the reimbursement was related to the meals and entertainment. Additionally, Toyboat provides George with medical insurance worth $7,200 per year. George drove his car 24,000 miles during the year, and he placed the car in service on June 1, 2012. 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. Assume his business miles were driven evenly during the year. George is a collegel 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
Lodgoing $85/day
Meals $50/day
Taxicabs $20/day

Marge Large is self-employed. She repairs rubber toy boats in the basement of their home, which is 25% of the house's square footage. The business code is 811490. She had the following income and expenses:
Income from rubber toy boat repairs $15,000
Cost of suppliers 5,000
Contract labor 3,500
Long-distance phone calls (business) 500
The Large's home cost a total of $150,000, of which the cost of the land was $20,000. The FMV of the house is $225,000. The house is depreciable over a 39-year recovery period. The Larges incurred other expenses:
Utility bills for the house $2,000
Real estate taxes 2,500
Mortgage interest 4,500
Cash charitable contributions 3,500

Prepare Form 1040, Schedules A, C and SE for Form 1040, and Forms 2106 and 8829 for the 2014 year. (Assume no depreciation for this problem and that no estimated taxes were paid by the Larges.)

Explanation / Answer

Form 1040 Wages, Salaries, Tips ect 80000 Business Income As per Schedule C 6417 Total 86417 Less:Itemised Deductions as Per ScheduleC -27470 Total Taxable Income 58947 Tax 7931 (As per Table) Form 2106 Vehicle Expenses Total Miles Used During the Year 24000 Business Miles Included 18000 %of Business Miles 0.75 Standard Mileage Rate@56Cents 10080 Vehicle Expenses 10080 Airfare 200 Lodging 255 Taxicabs 60 Meals 150 Meals 1500 Entertainment 4000 Total 10595 5650 Reimbursement Received 5000 Total 5595 2825 Total Allowable Deductions 8420 Form 1040 Schedule C Gross Reciepts 15000 Less: Cost of Goods -5000 Gross Profit 10000 Less: Other Expenses -500 Total 9500 Form 8829 % Used for Business 25% Gross Income 9500 Less: Depreciation as Per MARCS@2.564% 3333 -833.25 Utility Bills 2000 -500 Real Estate Taxes 2500 -625 Mortgage Interest 4500 -1125 Net Profit 6416.75 Depreciation Smaller of Adjusted Basis Or FMV 150000 Cost of Land 20000 Cost of Home 130000 %of Depreciation 2.564 Depreciation 3333.2 Schedule A Form 1040 Real Estate Taxes 1875 Mortgage Interest 3375 Local and State Income Tax 10300 Unreimbursed Job Expenses 8420 Charitable Contributions 3500 Total 27470

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