Miguel and Sofia Arroyo are married and live at 13071 Sterling Drive, Marquette, MI 49866. Miguel is a self-employed insurance claims adjuster (business activity code 524290), and Sofia is the dietitian for the local school district. They choose to file a joint tax return each year.

1. Miguel represents several national casualty insurance companies on a contract basis. He operates this business on the cash basis. He is paid a retainer and receives additional compensation if the claims he processes for the year exceed a specified number. During 2020, Miguel received $84,800 in payment for services rendered as reported on Forms 1099-MISC issued by several payor insurance companies. As an independent contractor, he is responsible for whatever expenses he incurs. Miguel works out of an office near his home. The office is located at 1202 Moose Road. He shares Suite 326 with a financial consultant, and operating expenses are divided equally between them. The suite has a common waiting room with a receptionist furnished and paid by the landlord. Miguel paid his one-half share of the 2020 expenses as detailed below.

Office rent	$11,600
Utilities (includes telephone and fax)	4,300
Replacement of waiting room furniture on April 22	3,600
Renters insurance (covers personal liability, casualty, theft)	1,400
Office expense (supplies, postage)	740
Toshiba copier (purchased new on February 7)	300
Waiting room coffee service (catered)	280
Waiting room magazine subscriptions	90

For his own business use, Miguel purchased a $2,100 laptop computer on June 17 and a $1,200 Nikon camera on February 5. Except for his vehicle (see item 2 below), Miguel uses the 179 write-off option whenever possible. Miguel has no expenditures for which he is required to file Form 1099s.

2. On January 2, 2020, Miguel paid $31,000 (including sales tax) to purchase a gently used Toyota Camry that he uses 92% of the time for business. No trade-in was involved in this purchase, and he did not claim any 179 expensing. Miguel uses the actual operating cost method to compute his tax deduction. He elects to use the 200% declining-balance MACRS depreciation method with a half-year convention. His expenses relating to the Camry for 2020 are as follows:

Gasoline	$3,500
Auto insurance	1,700
Interest on car loan	820
Auto club dues	325
Oil changes and lubrication	210
License and registration	190

In connection with his business use of the Camry, Miguel paid $510 for tolls and $350 in fines for traffic violations. In 2020, Miguel drove the Camry 14,352 miles for business and 1,248 miles for personal use (which includes his daily, roundtrip commute to work).

3. Miguel handles most claim applications locally, but on occasion he must travel out of town. Expenses in connection with these business trips during 2020 were $930 for lodging and $1,140 for meals. He also paid $610 for business dinners he had with several visiting executives of insurance companies with whom he does business. Miguels other business-related expenses for 2020 are listed below.

Contribution to H.R. 10 (Keogh) retirement plan	$8,000
Premiums on medical insurance covering self and family (spouse and children)	4,600
Premiums on disability insurance policy (pays for loss of income in the event Miguel is disabled and cannot work)	2,400
State and local occupation fee	450
Birthday gift for receptionist ($25 box of Godiva chocolates plus $3 for gift wrap)	28

4. Sofia earns $32,000 working as a registered dietitian for the Marquette Public School District. The job she holds as manager of the school lunch program is not classified as full time. Consequently, she is not eligible to participate in the teacher retirement or health insurance programs. Sofias expenses for 2020 are summarized as follows:

Contribution to traditional IRA	$6,000
Job hunting expense	720
Continuing education program	350
Membership dues to the National Association of Dietitians	120
Subscription to Nutrition Today	90

To work full time and earn a larger salary, Sofia applied for a position as chief dietitian for a chain of nursing homes. According to the director of the recruiting service she hired, the position has not yet been filled, and Sofia is one of the leading candidates. The continuing education program was sponsored by the National Association of Dietitians and consisted of a one-day seminar on special diets for seniors. Sofia drove the family Chevrolet Malibu 930 miles on job-related use and 5,200 miles in commuting to work, out of a total of 8,670 miles driven for the year. The Arroyos purchased the car on July 11, 2018, for $23,400.