discuss Item 1 shown below and describe how David will report his business income on Schedule C as self-employed.

Item 1

David R. and Sheri N. Johnson (ages 45 and 46) are married and live at 641 Cody Way, Casper, WY 82609. David is a consulting engineer, while Sheri is a paralegal. They file a joint return and use the cash basis for tax purposes.

1. Trained as a mining engineer, David has developed considerable expertise in the treatment and disposition of waste material. He is also well-versed in the Federal and state requirements for land reclamation projects. David maintains a consulting practice through which he advises clients on these matters. David's business activity code is 541990. Most of his clients are small and medium-size mine owner/operators located in Wyoming and contiguous states (e.g., Montana, Idaho, Utah). Usually, David is retained by a client on a contract fee basis and is reimbursed for all out-of-pocket expenses. In performing his services, David usually visits the job site and later submits his recommendations in a written report along with a statement for his services and expenses. David received the following amounts from his consulting business in 2015:

Fees for services rendered		$92,800
Expense reimbursements:
Airfare	$8,200
Meals	6,100
Lodging	5,200
Transportation (taxis, airport limos, car rentals)	920
Subtotal for expense reimbursement		20,420
Total received		$113,220