David R. and Ella M. Cole (ages 39 and 38, respectively) are husband

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 regional sales manager for Wren Industries, a national wholesaler of plumbing and heating supplies, and El art-time dental hygienist for a chain of dental clinics. David is classified by Wren as a statutory employee with compensation for 2013 (based on commissions) of $95,600. He is expected to maintain his own (dice and pay for all business expenses from this amount. Wren do not i quire him to render any accounting as to the use of these funds. It do Clio old Federal and state income taxes but does withhold and account for the payroll taxes incurred (e.g., Social Security and Medicare). David is covered by Wren's noncontribiltmy medical *plan but has chosen not to participate in its §401 jpc retirement plan.

David's employment-relatedexpenses for 2013 are summarized below:

Airfare $8,800

Lodging 5,000

Meals (during travel status) 4,800

Entertainment 3,600

around transportation (e.g., limos, rental cars, and taxis) 800'

Business gifts 900

Office supplies (includes postage, overnight delivery, and copying) 1,500

The entertainment involved business meals for purchasing agents, store owners