Question;Addison Parker, single and;age 32, lives at 3218 Columbia Drive, Spokane, WA 99210.;She is employed as regional sales manager by;VITA Corporation, a manufacturer and distributor of vitamins and food;supplements. Addison is paid an annual salary of $83,000 and a separate travel;allowance of $24,000. As to the travel allowance, VITA does not require any;accounting on the part of Addison.?Addison participates in VITA;contributory health and?401(k) plans. During 2014, she paid $3,500 for;the medical insurance and contributed $11,000 to the?401(k) retirement plan.;?Addison uses her automobile 70% for business and 30% for personal. The;automobile, a Toyota Avalon, was purchased new on June 30, 2012, for $37,000;(no trade-in was involved). Depreciation has been claimed under MACRS 200%;declining balance method, and no?179 election was made in the year of;purchase. (For depreciation information, see the IRS Instructions for Form;4562, Part V). During 2014, Addison drove 15,000;miles and incurred and paid the following expenses relating to the automobile;Gasoline $3,100;Insurance 2,900;Auto club dues 240;Interest on car loan 1,000;Repairs and maintenance 1,200;Parking (during business use) 600;Traffic fines (during business use) 400;?Because VITA does not have an office in;Spokane, the company expects Addison to maintain one in her home. Out of 1,800;square feet of living space in her apartment;Addison has set aside 450 square feet as an;office. Expenses for 2013 relating to the office are listed below.;Rent $16,000;Utilities 5,000;Insurance (renter casualty and theft;coverage) 1,600;Carpet replacement (office area only) 1,100;?Addison employment-related expenses;(except for the trip to Tokyo) for 2013 are summarized below.;Airfare $3,900;Lodging 3,100;Meals 2,800;Entertainment (business lunches) 2,400;Transportation (taxis and airport limos) 200;Business gifts 540;Continuing education 400;Professional journals 140;Most of Addison business trips involve;visits to retail outlets in her region. Store managers and their key employees;as well as some suppliers, were the parties entertained.;The business gifts were boxes of candy costing;$30 ($25 each plus $5 for wrapping and shipping) sent to 18 store managers at;Christmas. The continuing education was a noncredit course dealing with;improving management skills that;Addison took online.?In July 2013, Addison;traveled to Japan to investigate a new process that is being developed to;convert fish parts to a solid consumable tablet form. She spent one week;checking out the process and then took a one-week vacation tour of the country.;The round-trip airfare was $3,400, while her;expenses relating to business were $1,750 for lodging ($250 each night), $1,470;for meals, and $350 for transportation.;Upon returning to the United States, Addison;sent her findings about the process to her employer. VITA was so pleased with;her report that it gave her an employee achievement award of $10,000. The award;was sent to Addison in January 2014.?Addison provides more than 50% of the support;of her parents (Gordon and Anita;Parker), who live in Seattle. In addition to;modest Social Security benefits, her parents receive a small amount of interest;on municipal bonds and nontaxable retirement income.?Besides the items already;mentioned, Addison had the following receipts in 2014;Interest income?;City of Tacoma general purpose bonds $ 350;Olympia State Bank 400 $ 750;Proceeds from property sales?;City lot $13,000;Sailboat 18,000 31,000;Cash found at airport 5,000;?Regarding the city lot (located in Vancouver);Addison purchased the property in;2000 for $16,000 and held it as an investment.;Unfortunately, the neighborhood;where the lot was located deteriorated;and property values declined. In 2014;Addison decided to cut her losses and sold the;property for $13,000. The sailboat was used for pleasure and was purchased in;2010 for $16,500. Addison sold the boat because she purchased a new and larger;model (see below). While at the Spokane airport, Addison found an unmarked;envelope containing $5,000 in $50 bills. As no mention of any lost funds was;noted in the media, Addison kept the money.?Addison expenditures for;2014(not previously noted) are summarized below.;Medical (not covered by insurance) $7,000;State and local general sales tax 3,300;Church pledge (2012 and 2013) 5,600;Fee paid for preparation of 2012 income tax;return 500;Contribution to mayor reelection campaign;fund 200;Premiums on life insurance policy 2,100;Contribution to a Coverdell Education Savings;account (on behalf of a favorite nephew) 2,000;?Most of the medical expenses Addison paid were;for her mother dental implants.;Addison keeps careful records regarding sales;taxes. In 2014, the sales tax total was unusually high due to the purchase of a;new sailboat. In 2014, Addison decided to pay her church pledge for both 2013and 2014. The insurance premium was on a policy covering her father life.;(Addison is the designated beneficiary under the policy.);Relevant Social Security numbers are 123-45-6785;(Addison), 123-45-6783 (Gordon), and 123-45-6784 (Anita). Addison;employer withheld $5,600 for Federal income tax purposes, and she applied;her $800 overpayment for 2012 toward the 2013 tax liability.;Compute Addison Federal income tax payable;(or refund) for 2013. In making the calculation, use the Tax Rate Schedule and;disregard the application of the alternative minimum tax (AMT), which is not;discussed until Chapter 12.
Paper#39811 | Written in 18-Jul-2015Price : $42