Marvin L. and Molly S. Hall are married and live at 310 Poplar Ave., Fort Wayne, IN 46802. They file a joint return and are calendar year, cash-basis taxpayers.

1. Marvin is a self-employed claims adjuster (professional activity code is 52490) for several major casualty insurance companies. He maintains an office at 4230 Peony St., STE 130, Fort Wayne, IN 46802. He shares the suite with several other professionals and has no employees. A receptionist handles all calls and is provided by the landlord as a part of the services offered to tenants. Marvin’s work-related expenses for 2010 are as follows:

Office rent $8,100
Utilities 3000
Accounting services 1,200
Office expenses (supplies, use of copier, etc.) 1,100
Legal services (see item 8 below) 300
State and local license fees 900
Renter’s insurance (covers personal liability, casualty, theft) 1,500
Replacement of reception room furnishings (6/5/2009) 2,200
Professional dues and subscriptions and trade publications 400
Business lunches 1,400
Contribution to H.R. 10(Keogh) plan 8,000
Medical insurance premiums 5,000

The business meals Marvin paid for were to entertain various visiting executives from the insurance companies he does business with. As is the case with all of Marvin’s business transactions, the lunches are properly documented and supported by receipts. Because the reception room furnishings were looking shabby, Marvin and his suite-mates had them replaced. The $2,200 Marvin spent was his share (i.e., sofa and coffee table) of the cost. Marvin follows a policy of avoiding depreciation by utilizing the §179 election to expense assets. All of Marvin’s office equipment (e.g., desk, chairs, file cabinets, computer, etc.) have previously been expensed. Of 10,000 total miles in 2010, Marvin drives his car (a ford explorer purchased on 6/1/2007) 3,200 miles for business (not including commuting) and has business parking and toll charges of $310. The Halls use the automatic mileage method of claiming automobile expenses.

Prepare taxes on Form 1040.