Question

George Large (SSN 000-11-111) and his wife Marge Large (SSN 000-22-222) live at 2000 Lakeview Drive,Cleveland, OH 49001 and want you to prepare their 2016 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, 2014. 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. 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 business cos is 811490. She had the following income and expenses:

Income from rubber toy bost repairs: $15,000 , Cost of supplies: $5,000, Contract labor: $3,500 and Telephone (business) $500.

The Largues use the simplified method to figure their deduction for Marge's busniess use of their home. Larges incurred the following total other expenses: Real estate taxes: 2,500 Mortgage interest: 4,500 Cash chritable contributions: 3,500.

Prepare Form 1040, Schedules A,C and SE for form 1040, Form 2106 for the 2016 year. (Assume no depreciation for this problem and that no estimated taxes were paid by the Larges)

Answer 1

Note : $7,200 of medical insurance paid by employer is not deductible. So, we have not considered.

1. Form 1040.

2. Schedule A

3. Schedule - C.

4. Schedule - SE part I.

5. Form 2106.