Week 7 Assignment --Tax Return Problem P9-54 David R. and Ella M. Cole (ages 39 and 38, respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a regional sales manager for Wren Industries, a national wholesaler of plumbing and heating supplies, and Ella is a part-time dental hygienist for a chain of dental clinics. David is classified by Wren as a statutory employee with compensation for 2015 (based on commissions) of $95,000. He is expected to maintain his own office and pay for all business expenses from this amount. Wren does not require him to render any accounting as to the use of these funds. It does not withhold Federal and state income taxes but does withhold and account for the payroll taxes incurred (e.g., Social Security and Medicare). The Coles are adequately covered by Wren's noncontributory medical plan but have chosen not to participate in its 401(k) retirement plan. David's employment-related expenses for 2015 are summarized below. Airfare Lodging Meals (during travel status) Entertainment Ground transportation (e.g., limos, rental cars, and taxis) Business gifts Office supplies (includes postage, overnight delivery, and copying) $8,800 5,000 4,800 3,600 800 900 1,500 The entertainment involved business meals for purchasing agents, store owners, and building contractors. The business gifts consisted of $50 gift certificates to a national restaurant. These were sent by David during the Christmas holidays to 18 of his major customers. In addition, David drove his 2013 Ford Expedition 11,000 miles for business and 3,000 for personal use during 2015. He purchased the Expedition on August 15, 2012, and has always used the automatic (standard) mileage method for tax purposes. Parking and tolls relating to business use total $340 in 2015. When the Coles purchased their present residence in April 2012, they devoted 450 of the 3,000 square feet of living space to an office for David. The property cost $440,000 ($40,000 of which is attributable to the land)