David R. and Sheri N. Johnson (ages 45 and 46) are married and live at 641 Cody Way, Casper, WY 82609. David is a consulting engineer, while Sheri is a paralegal. They file a joint return and use the cash basis for tax purposes.

1. Trained as a mining engineer, David has developed considerable expertise in the treatment and disposition of waste material. He also is well versed in the federal and state requirements for land reclamation projects. David maintains a consulting practice through which he advises clients on these matters. David's business activity code is 541990. Most of his clients are small and medium-size mine owner/operators located in Wyoming and contiguous states (e.g., Montana, Idaho, Utah). Usually, David is retained by a client on a contract-fee basis and is reimbursed for all out-of-pocket expenses. In performing his services, David usually visits the job site and later submits his recommendations in a written report along with a statement for his services and expenses. David received the following amounts from his consulting business in 2012:
Fees for services rendered

$ 92,800

Expense reimbursements:

Airfare

$8,200

Meals

6,100

Lodging

5,200

Transportation (taxis, airport limos, car rentals)

920

Subtotal for expense reimbursement

20,420

Total received

$113,220

Besides the items already mentioned, the Johnsons had the following receipts during 2012:
Interest income-

City of Cheyenne general purpose bonds

$1,900

CD at Wells Fargo Bank

1,100

Money market account at Bank of America

400

Yard (garage) sale

950

Qualified dividends on Meadowlark Corporation common stock

700

Jury duty fees

420
The yard sale involved used furniture, appliances, books, toys, and other household goods, having an estimated original cost value of $1,800. In connection with her jury duty assignment in June, Sheri drove the Suburban 40 miles and incurred expenses of $30 for parking and $45 for meals