• The taxpayers are preparing their own return (i.e., no preparer is involved). • For the past several years, the Marshalls have itemized their deductions from AGI. • The taxpayers have the necessary substantiation (e.g., records, receipts) to sup- port all transactions reported in their tax return. • Make necessary assumptions for information not given in the problem but needed to complete the return. PROBLEM 2—INDIVIDUALS (FORM 1040) Neil B. (age 42) and Mae R. (age 48) King are married and live at 7605 Walnut Street, Kansas City, MO 64114. Neil is a chemist employed by Sargent Pharmaceuticals, Inc., and Mae is a self-employed doctor of anesthesiology. They are calendar year, cash basis taxpayers. 1. Sargent Pharmaceuticals develops and produces injectable medicines used in chemotherapy treatments for cancer patients. Neil manages the Kansas City facility for an annual salary of $90,000. Sargent makes contributions to a qualified defined contribution pension plan for all of its full-time employees. Although Neil also has the opportunity to make contributions to the plan, he chose not to do so in 2016. Neil participates in his employer’s group health insurance plan, to which he contrib- uted $4,000 in 2016 for medical coverage. These contributions are made with pre- tax dollars. The health plan covers Neil, Mae, and their two dependent children. Because of the risk associated with Neil’s work (i.e., processing chemotherapy drugs), Sargent provides all of its employees with $200,000 of group term life insur- ance. An additional $180 of income is included in Neil’s Form W–2 to report the tax- able value of this insurance. 2. In late 2015, three employees at Sargent’s Chicago facility were seriously injured while processing a customer order. While the injuries occurred in what the com- pany called a “freak accident,” Neil began to look for a safer job in the chemical industry. He incurred the following expenses during 2016: Employment agency fee $3,200 R!esum!e consultation, preparation, and distribution 1,800 Expenses in connection with job interviews 4,100 Neil received several attractive offers but ultimately decided against changing jobs. Influential in his choice was a promotion to regional manager and a $20,000 pay raise starting in 2017. 3. Sargent generally reimburses Neil for expenses related to his work for the company. However, as a matter of policy, Sargent does not reimburse for the following: Monthly dinner meetings of the Midwestern Chemists Association [MCA] $825 Dues to professional organizations 240 Subscriptions to professional journals 180 MIA correspondence study course 230 Neil attended 11 MCA dinner meetings in 2016. Each dinner involved the following costs: $40 (fee for speaker), $25 (price of meal), and $10 (parking). Neil goes to the meetings from work and returns home the same night. The MIA (Management Insti- tute of America) charge was for an online home study course on ways to improve safety measures and.