Complete the following additional paragraph items: 1 – 5 Please


Question Description:

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Complete the following additional paragraph items: 1 – 5 Please also examine the bullets on requirements to add that may pertain to these paragraphs. State any assumptions you are making in a separate memorandum attached to the return. Will S. (age 42) and Mari N. (age 41) Frost are married and live at 426 East Twin Oaks Road, Sioux Falls, SD 57105. Will is the regional manager for a restaurant chain (Moveable Feast), and Mari is a self-employed architect. They are calendar-year, cash-basis taxpayers. 1. Will’s annual salary from Moveable Feast is $82,000. He also earns an annual bonus. The amount is determined in late December, and Will receives it in January of the next year. Will’s 2012 bonus was $6,000 (received in 2013), and his 2013 bonus was $7,000 (received in 2014). Will is also paid a flat travel allowance of $16,000 per year. The allowance is to cover his expenses in visiting restaurants in his region to conduct inspections, consult with the local managers, and recruit potential hires. Although Will maintains substantiation of his travel, he is not required to account for these expenses to Moveable Feast. Will participates in hisemployer’s group health insurance plan to which he contributed $3,600 in 2013 for medical coverage. These contributions were made with after-tax dollars. Thehealth plan covers Will, Mari, and their two dependent children. Moveable Feast does not provide any retirement benefits, but it has established a §401(k) plan toenable its employees to make voluntary contributions. Will contributed $10,000 to the plan in 2013. The company provides an office for Will’s use that is located at 110 North Reid Street, Suite 217, Sioux Falls. 2. Besides the business use of his car (see item 3 below), Will’s out-of-pocketemployment-related expenses for 2013 are as follows: Airfare $2,600 Lodging 3,200 Meals 3,400 Entertainment 800 Car rentals, limos, taxis 600 Parking and tolls 300 Subscriptions to trade journals 120 Dues to trade association 80 Business gifts 550 E-1E-2 While on business trips in his car, Will was cited for speeding several times and paid related fines totaling $620. Will presented the business gifts in lateDecember to managers of thetop 11 restaurants in his region, with each manager receiving a $50 gift card to a national retailer. 3. On March 5, 2012, Will purchased a new Ford Focus for use in his job. The car cost $24,000 (including sales tax), with no trade-in involved. The car was driven 14,000 miles in 2012 and 18,000 in 2013 with usage as follows: 20% for commuting to theoffice and 80% for business trips. The mileage for 2013 was evenly distributed throughout the year. Will uses the actual operating cost method, and for depreciation purposes, uses 200% declining-balance with a half-year convention. In addition, Will did not claim any §179 expensing or additional first-year depreciation last year when he bought the car. (See Table 3 of the Instructions to Form 4562.) Will’s expenses related to operating the Ford Focus for 2013 are as follows: Gasoline $2,900 Oil change and lubrication 150 Auto insurance 1,800 Repairs 400 Auto club dues 160 License and registration 120 Interest on car loan 900 4. Mari Frost is a licensed architect who works part time on a consulting basis. Her professional activity code is 541310. Her major clients are real estate developers (both residential and commercial) for whom she prepares structural designs and construction plans. She also advises on building code requirements regarding the renovation and remodeling of existing structures. Mari collected $52,000 in consulting fees during 2013. This total includes a $3,000 payment for work she performed in 2012 and does not include $5,000 she billed in December for work performed in late 2013. In addition, Mari has an unpaid invoice for $6,000 from a client for work done in 2011. This client was convicted of arson in August 2013 and is now serving a five-year sentence in state prison. Mari feels certain that she

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