Christopher Crosphit $(birthdate$ April $28,1981,$ Social Security number $565-12-6789)$ and Traynor Crosphit $(birthdate$ July $17,1980)$ are married filing jointly $in2023.$ They have a dependent son, Arnold $(Social$ Security number $276-23-3954).$ Arnold $(birthdate$ July $1,2005)is$ a high school student; $he$ does not qualify for the child tax credit but does qualify for the $$500$ other dependent credit.Chris owns and operates a health club called $Catawba$ Fitness.$$ The business $is$ located $at4321$ New Cut Road, Spartanburg, $SC29303.$ The principal business code $is812190$ and the EIN $is12-3456789.$ Chris had the following income and expenses from the health club:Income$$216,000$Expenses:Business insurance$3,500$Office supplies$3,400$Payroll$99,000$Payroll taxes$9,000$Travel$2,550$Meals$2,100$Business gifts$800$Equipment maintenance$10,700$Cleaning service$8,800$Equipment rent$22,500$Utilities$14,000$Telephone$2,700$Rent$32,000$Advertising$4,000$Special workout clothes and boxing gloves$750$Subscription $to$ Biceps Monthly magazine$100$Online educational seminar $on$ gym safety$800$Other expenses$1,800$The business uses the cash method $of$ accounting and has $no$ accounts receivable $or$ inventory held for resale.Travel includes a trip $to$ a weight$-$lifting seminar $in$ Miami, $FL.$ The one$-$day seminar cost $$450.$ Chris took Traynor and Arnold with him. Airfare was $$400$ for each $of$ them. The seminar started early $in$ the morning, $so$ they flew down the night before and then left the following morning since the seminar ended late $in$ the day. Traynor and Arnold went $to$ Miami Beach for the day. Lodging was $$250$ per night for two nights and meals were $$100$ for each $of$ the three $of$ them $($$$300$ total$).$ They also paid $$100$ for ground transportation from the airport $to$ the hotel hosting the seminar.Meals includes $$1,000$ for a staff party for all employees $of$ Catawba Fitness, $$800in$ restaurant meals, and $$300in$ non$-$restaurant meals.Chris purchased business gifts for $20$ customers $at$ a cost $of$ $$40$ each.The Crosphits live next door $to$ the health club $at4323$ New Cut Road. Chris does all the administrative work for the health club out $ofan$ office $in$ their home because the gym lacks any suitable space. The room $is171$ square feet and the house has a total $of1,800$ square feet. The Crosphits pay $$20,000$ per year $in$ rent and $$4,000in$ utilities. Chris would prefer $to$ use the simplified method $to$ deduct his home office $if$ possible.Traynor works $as$ a sales representative for $an$ online manufacturer and distributor $of$ exercise bicycles. Her $W-2$ follows:$AW-2$ form shows details $of$ Traynor Crosphit's Wage and Tax statement for $2023.$ The form $is$ divided into two panels. The first panel contains $atof$ sections. $It$ shows filled$-in$ fields for the following: $a.$ Employee's social security number: $712-22-9881$; $b.$ Employer identification number $(E$ I $N)$: $47-3533716$; $c.$ Employer's name, address, and ZIP code: Pack $of$ Bikes, Incorporated. $120,$ East twenty$-$fifth Street, Tenth Floor, New York, $NY10001$; $e.$ Employee's first name, initial, and last name, and $f.$ Employee's address and ZIP code: Traynor Crosphit, $4323$ New Cut Road, Spartanburg, $SC29303.$ The field $tobe$ filled $in$ this panel $isd.$ Control number. The second panel contains $1to20$ sections. $It$ shows filled$-in$ fields for $1.$ Wages, tips, other compensation: $49,850\mathrm{.}00(highlighted)$; $2.$ Federal income tax withheld: $2,614\mathrm{.}12(highlighted)$; $3.$ Social security wages: $49,850\mathrm{.}00$; $4.$ Social security tax withheld: $3,090\mathrm{.}70$; Medicare wages and tips: $49,850\mathrm{.}00$; $6.$ Medicare tax withheld: $722\mathrm{.}83$; $12a.$ See instructions for box $12$: $C,50\mathrm{.}00$; $12b$: $DD,6,550\mathrm{.}00$; $14.$ Other, $FS$ A health $3,050\mathrm{.}00$ dollars; $15.$ State, $SC$; $16.$ Employer's state I $D$ number, $10008723$; State wages, tips, $et$ cetera: $49,850\mathrm{.}00$; and $17.$ State income tax: $600\mathrm{.}00.$ The fields $tobe$ filled $in$ this panel are: $7.$ Social security tips; $8.$ Allocated tips; $9,10.$ Dependent care benefits; $11.$ Nonqualified plans; $12c,12d$; $13.$ Unchecked boxes for Statutory employee, Retirement plan, and Third$-$party sick pay; $18.$ Local wages, tips, $et$ cetera; $19.$ Local income tax; and $20.$ Locality name. A footnote below the form reads, Form $W-2$ Wage and Tax Statement. Copy $B-ToBe$ Filed With Employee's FEDERAL Tax Return. This information $is$ being furnished $to$ the Internal Revenue Service. $2023.$ Department $of$ the Treasury$-$Internal Revenue Service.Chris ran $up$ credit card debt $in2023$ and was able $to$ negotiate a reduction $of$ his balance. $He$ received the following $1099-C$:A form $1099-C$ for cancellation $of$ debt received $by$ Christopher Crosphit. The top right corner $of$ the form shows $OMB$ Number $1545-1424,$ form $1099-C(Revised$ January $2022),$ For calendar year $2023.$ The form $is$ divided into two parts. The first part shows the following filled$-in$ fields: Creditor's name, street address, city $or$ town, state $or$ province, country, ZIP, $or$ foreign postal code, telephone number: Explorer Card Services, $100N.$ Phillips Avenue, Sioux