' Note: This problem is for the 2021 tax year. David R. and Ella M. Cole (ages 39 and 38, respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a ' self-employed consultant specializing In retail management, and Ella is a dental hygienist for a chain of dental clinics. - David earned consulting fees of $145,000 In 2021. He maintains his own ofce and pays for all business expenses. The Coles are adequately covered by the medical plan provided by Elia's employer but have chosen not to participate in its 5 401(k) retirement - Eliza's employmentrelated expenses for 2021 are summarized below. Airfare $8,800 Lodging 4,835 Meals from restaurants (during travel status) 2,400 Entertainment 3,600 > Ground transportation (e.g., limos, rental cars, and taxis) 800 Business giits 900 Ofce supplies (includes postage, overnight delivery, and copying) 1,500 The entertainment involved taking clients to sporting and musical events. The business gifts consisted of $50 gift certicates to a national restaurant. These were sent by David during the Christmas holidays to 18 of his major clients. In addition, David drove his 2019 Ford Expedition 11,000 miles for business and 3,000 for personal use during 2021. He purchased die Expedition on August 15, 2018, and has always used the automatic (standard) mileage method for tax purposes. Parking and tolls relating to business use total $340 in 2021. - When the Coles purchased their present residence in April 2018, they devoted 450 of the 3,000 square feet of living space to an ofce for David. The property cost $440,000 ($40,000 of which is attributable to the land) and has since appreciated in value. Expenses relating to the residence in 2021 (except for mortgage interest and property taxes; see below) are as follows: Insurance $2,600 Repairs and maintenance 900 Utilities 4,700 Painting office area; area rugs and plants (in the office)* 1,800 *Treat as a direct ofce in home expense. In terms of depreciation, the Coles use the MACRS percentage tables applicable to 39-year nonresidential real property. As to depreciable property (e.g., ofce furniture), David tries to avoid capitalization and uses whatever method provides the fastest write off for tax purposes. . Ella works at a variety of offices as a substitute when a hygienist is ill or on vacation or when one of the clinics is particularly busy (e.g., prior to the beginning of the school year). Assume that Ella is an employee (not an independent contractor). Besides her transportation, she must provide and maintain her own uniforms. Her expenses for 2021 appear below. Uniforms $690 State and city occupational licenses 380 Professional journals and membership dues in the American Dental Hygiene Association 340 Correspondence study course (taken online) dealing with teeth whitening procedures 420 . Ella's salary for the year is $42,000, and her Form w-2 for the year shows income tax withholdings of $4,000 (Federal) and $1.000 (state) and the proper amount of Social Security and Medicare taxes. - Besides the Items already mentioned, the Coles had the following receipts during 2021. Interest income State of Colorado general purpose bonds $2,500 IBM bonds 800 Wells Fargo Bank 1,200 $4. 500 , Check M \\i' l