Tax Accounting

Use the tax formula as a structure for your answer. You need not use a tax return form. You should not use a tax computation service for this problem completion. As a suggestion, you should break this problem into small parts, solve each part, do what you know, and come back to what you do not.

Johnson recieves a $7,800 reimbursment for the travel expenses. He did not recieve any reimbursement for the auto expenses. He uses his personal automobile 80$ for business use and placed his current automobile in service on October 1, 2008. Total, business miles driven during the year (evenly throughtout the year) amount to 26,400,his commuting miles in 2012 amount to 2,000 (average, daily roundtrip of 7,000 miles), and other personal miles amount to 4,600 miles. Johnson’s AGL is $60,000, and he has no other miscellaneous itermized deductions.

a) Calculate Johnson’s expense deduction using the 2012 Form 2016 )Employee Business Expenses_ based on actual automobile expenses and other employee bsuiness expenses.

b) Calculate Johnson’s expense deduction for 2012 using the standrad mileage rate method and other employee business expenses. (Assume that none of the restrictions on the use of the standard mileage rate method are applcable)

George Large (SSN 000-11-1111) and his wife Marge Large (SNN 000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 and want you to prepare their 2012 income tax return based on the information below:

George Large worked as a salesman for Toyboat, Inc. He recieved a salary of $80,000 ($8,500 of federal income taxes withheld and $1,800 of state income taxes withheld) plus an expense reimbrsement from Toyboat of %5,000 to cover his employee business expenses. George must make an adequate accounting to his employer and return any excess reimbursement, none of the reimbirsement was related to the meals and entertainment. Additionally, Toyboat provides George with medical insruance worth $7,200 per year. George drove his car a total of 24,000 miles during the yeear, and he placed the car in service on June 1, 2010. 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 college basketball fan. He purchased two season tickets for a total of $4,000. He tales a costomer to every game, and they discuss some business before, during, adn after the games. George also takes 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 sent the other two days sighseeing. He had the following expenses during each of the fve days of his trip:

Airfare  $2,000

Lodging $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 toyboat repais  $15,000

Cost of supplies  $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 the following total other expenses:

Utility Bill of the House   $2,000

Real State Taxes   $2,500

Mortgate Interest   $4,500

Cash charitable contributions  $3,500

Prepare form 1040, schedules A,C and SE for From 1040, and Froms 2106 and 8829 for the 2012 year. (Assume no depreciation for this problem and that no estimates taxes were paid by the Larges)