Javier F. and Eldi M. Barbosaare married and live at 9540 Maple Leaf Drive, Gaithersburg, MD 20852. They file a joint return and are calendar year, cash basis taxpayers.
Javier is a self-employed accountant (professional activity code is 541213). He maintains an office at 123 SE Wisconsin Avenue, Bethesda, MD. 20849. He shares the suite with several other professionals and has no employees. A receptionist handles all calls and is provided by the landlord as part of the services offered to tenants. Javier’s work-related expenses for 2014 are as follows:
Office rent $9,800
Utilities 3,000
Accounting services 1,200
Office expenses (supplies, use of copier, etc.) 1,100
Legal services (see item 9. below) 300
State and local license fees 900
Renter’s insurance (covers personal liability, casualty, theft) 1,500
Replacement of reception room furnishings (6/5/2014) 2,200
Professional dues and subscriptions to trade publications 600
Business lunches 1,400
Contribution to H.R. 10(Keogh) plan 4,000
Medical insurance premiums 6,000
The business meals Javier paid for were to entertain various visiting executives from the clients he does business with. As is the case with all of Javier’s business transactions, the lunches are properly documented and supported by receipts. Because the reception room furnishings were looking shabby, Javier and his suite-mates had them replaced. The $2,200 Javier spent was his share (i.e., a sofa and coffee table) of the cost. Javier follows a policy of avoiding depreciation by utilizing the Section 179 election to expense assets. All of Javier’s office equipment (e.g., desk, chairs, file cabinets, computer, etc.) has previously been expensed. Of 16,000 total miles in 2014, Javier drives his car (a Ford Explorer purchased on 6/1/2012) 13,400 miles for business (not including commuting) and has business parking and toll charges of $310. The Barbosas use the automatic mileage method of claiming automobile expenses.
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