Bill's W-2 is attached. Bill participates in his employer's group health insurance plan to which he contributed $3,600 in 2015 for medical coverage. These contributions were made with after-tax dollars. The health plan covers Bill, Mary, and their two children. The company provides an office for Bill's use that is located at 110 North Round Street, Suite 217, Carbondale, IL.
Prepare an income tax return (with appropriate schedules) for the Clients for 2015, using the following guidelines and information:
1. Bill participates in his employer's group health insurance plan to which he contributed $3,600 in 2015 for medical coverage. These contributions were made with after-tax dollars. The health plan covers Bill, Mary, and their two children. The company provides an office for Bill's use that is located at 110 North Round Street, Suite 217, Carbondale, IL.
2. Besides the business use of his car (see item 3 below), Bill's out-of-pocket employment related expenses for 2015 are as follows:
Airfare $3,650
Lodging 2,600
Meals 3,400
Entertainment 950
Car rentals, limos, taxis 600
Subscriptions to trade journals 120
Dues to trade association 80
Business gifts 550
ComPac reimbursed Bill for all the employment related expenses pursuant to its accountable plan.
3. On March 5, 2013, Bill purchased a new Ford Focus for use in his job. The Car cost $34,000 (including sales tax), with no trade-in involved. The car was driven12,000 miles in 2013 and 18,000 miles in 2014 and 12,000 miles in 2015 with usage as follows: 25% for commuting to the office and 75% for business trips. The mileage for 2015 was evenly distributed throughout the year. Bill uses the actual operating cost method, and for depreciation purposes uses 200% declining-balance with a half-year convention. In addition, Bill did not claim any sec. 179 expensing or additional first-year depreciation when he bought the car. Bill's expenses related to operation the Ford Focus for 2015 are as follows:
Gasoline $3,500
Oil change and lubrication 250
Auto insurance 2,000
Repairs 600
Auto club dues 100
License and registration 160
Interest on car loan 500
Parking and tolls 300
4. Mary is a licensed attorney who works part time on a consulting basis. Mary collected $ 75,000 in consulting fees during 2015. Mary does her work at the client's premises or in her office at home (see item 6 below). The federal business code is 541100. Her business expenses for 2015 are as follows:
Supplies $5,000
Library materials 5,000
Expert fees 10,000
Professional license fee 400
Subscriptions to professional journals 350
Dues to professional organizations 500
Attorney Subcontractor fees paid (1099s issued to others) 10,000
In addition, Mary drove the family Acura (purchase on June 7, 2013) 1,050miles on her job assignments. She uses the standard mileage method to deduct business costs related to the Acura. During 2015, Mary drove the car a total of 8,200 miles. The car was driven12,000 miles in 2013 and 8,000 miles in 2014: 75% for personal use and 25% for business trips. She paid $150 in parking fees and tolls.