Saanvi Patel (Social Security number 123-45-6785), single and age 32, lives at 3218 Columbia Drive, Spokane, WA 99210. She is employed as a regional sales manager by VITA Corporation, a manufacturer and distributor of vitamins and food supplements. During 2022, Saanvi is paid an annual salary of $83,000 and a separate travel allowance of $30,000. In order to access the travel allowance, VITA requires adequate accounting by Saanvi.

• Saanvi participates in VITA’s contributory health and § 401(k) plans. During 2022, she paid $4,500 for her share of the medical insurance and contributed $11,000 to the § 401(k) retirement plan.

• Saanvi uses her automobile 70% for business and 30% for personal. The automobile, a Toyota Avalon, was purchased new on June 30, 2020, for $37,000 (no trade-in was involved). Depreciation has been claimed using the MACRS 200% declining-balance method, and no § 179 election was made in the year of purchase. During 2022, Saanvi drove 15,000 miles and incurred and paid the following expenses relating to the automobile:

• Because VITA does not have an office in Spokane, the company expects Saanvi to maintain one in her home. Out of 1,500 square feet of living space in her apartment, Saanvi has set aside 300 square feet as an office. Expenses for 2022 that relate to her home office are listed below.

• Saanvi’s employment-related expenses for 2022 (except for the trip to Korea; discussed next) are summarized below.

Most of Saanvi’s 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 Saanvi took online.

• In July 2022, Saanvi traveled to Korea 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 $3,600, and her expenses relating to business were $2,100 for lodging ($300 each night), $1,470 for meals, and $350 for transportation. Upon returning to the United States, Saanvi 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 Saanvi in January 2023.

• Besides the items already mentioned, Saanvi had the following receipts in 2022:

Regarding the city lot (located in Vancouver), Saanvi purchased the property in 2007 for $16,000 and held it as an investment. Unfortunately, the neighborhood where the lot was located deteriorated, and property values declined. In 2022, Saanvi decided to cut her losses and sold the property for $13,000. The sailboat was used for pleasure and was purchased in 2018 for $16,500. Saanvi sold the boat because she purchased a new and larger model (see below). While at the Spokane airport, Saanvi found an unmarked envelope containing $5,000 in $50 bills. Because no mention of any lost funds was noted in the media, Saanvi kept the money.

• Saanvi’s expenditures for 2022 (not previously noted) are summarized below.

Saanvi keeps careful records regarding sales taxes. In 2022, the sales tax total was unusually high due to the purchase of a new sailboat. In 2022, Saanvi decided to pay her church pledge for both 2022 and 2023. The insurance premium was on a policy covering her father’s life. (Saanvi is the designated beneficiary under the policy.)

Saanvi’s employer withheld $8,600 for Federal income tax purposes, and she applied her $600 overpayment for 2021 toward the 2022 tax liability. Compute Saanvi’s Federal income tax payable (or refund) for 2022. 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.

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Gasoline Insurance Auto club dues Interest on car loan Repairs and maintenance Parking (during business use) Traffic fines (during business use) $3,100 2,900 240 1,100 1,200 600 500