Reference no: EM13674062

Will S. (age 42) and Mari N. (age 41) Frost are married and live at 426 East Twin Oaks Road, Sioux Falls, SD 57105. Will is the regional manager for a restaurant chain (Moveable Feast), and Mari is a self-employed architect. They are calendar-year, cash-basis taxpayers.

1.Will's annual salary from Moveable Feast is $82,000. He also earns an annual bonus. The amount is determined in late December, and Will receives it in January of the next year. Will's 2012 bonus was $6,000 (received in 2013), and his 2013 bonus was $7,000 (received in 2014). Will is also paid a flat travel allowance of $16,000 per year. The allowance is to cover his expenses in visiting restaurants in his region to conduct inspections, consult with the local managers, and recruit potential hires. Although Will maintains substantiation of his travel, he is not required to account for these expenses to Moveable Feast. Will participates in his employer's group health insurance plan to which he contributed $3,600 in 2013 for medical coverage. These contributions were made with after-tax dollars. The health plan covers Will, Mari, and their two dependent children. Moveable Feast does not provide any retirement benefits, but it has established a §401(k) plan to enable its employees to make voluntary contributions. Will contributed $10,000 to the plan in 2013. The company provides an office for Will's use that is located at 110 North Reid Street, Suite 217, Sioux Falls