Bussiness

# 53
Travel and Entertainment. Monique is a self-employee manufacturer’s representative who solicits business for clients and receives a commission based on sales. She incurs the following expenditures during the current year:
Airfare and lodging while away from home overnight $4,000
Business meals while traveling at which business is discussed $1,000
Local transportation costs for automobile, parking, tolls, etc(business related $2,000
Commuting expenses $1,000
Local entertainment of customers $2,000
Total 10,000

a. which of the expenditures listed above(if any) are deductible by Monique?
b. are each of these items classified as for AGI or from AGI deductions?
c. how would your answers to parts a and b change if Monique were an employee rather than self-employed and none of the expenses were reimbursed by her employer?

#56
Business/Personal Travel Expenses. In the current year, Mike’s AGI is $50,000. Mike has no miscellaneous itemized deductions other than the employment-related expenses listed below. Mike attends a professional trade association convention in Los Angeles. He spends three days at the meeting and two days vacationing before meeting. Mike was unable to obtain excursion airfare rates (i.e. staying over a Saturday night) despite the fact that he was on vacation immediately before the meeting. Mike’s total expenses include the following:
Airfare $450
Meals ($50 per day) 250
Hotel ($100 per day) 500
Entertainment of customers
(business discussed) 500
Total $1,700

Mike’s employer reimburses him for the business-related expenses and, accordingly, mike receives a reimbursement of $1,400 ($450 + 150 + 300 + 500).
a. how much can Mike deduct for employment-related expenses?
b. how is the reimbursement reported on Mike’s tax return?
c. how much of the reimbursement may Mike’s employer deduct?

# 58
Miscellaneous Itemized Deductions. In the current year, Melissa, a single employee whose AGI is $100,000 before any of the items below, incurs the following expenses:
Safe deposit box rental for investments $100
Tax return preparation fees 500
Moving expenses (deductible under Sec.217) 2,000
Mortgage interest on Melissa’s principal residence 12,000
Real estate taxes on Melissa’s principal residence 1,800
Unreimbursed employment-related expenses (other than
Business meals and entertainment) 6,000
Unreimbursed employment-related expenses for business
Meals and entertainment (business is discussed) 1,200
Total $23,600

a. what is the amount of Melissa’s total miscellaneous itemized deductions (after deducting the 2% floor)?
b. what is the amount of Melissa’s total itemized deductions?
c. what is the amount of Melissa’s total itemized deductions if her AGI, after all adjustment above, is $190,000?

 
# 60
Auto Expense. Michelle is an employee who must use her personal automobile for employment-related business trips. During 2012, Michelle drives her car 60% for business use and incurs the following total expenses (100% use of car):
Gas and oil $9,000
Repairs 1,400
Depreciation 4,700
Insurance and license fees 1,300
Parking and tolls (business related) 100
Total $16,500

Michelle drives her car a total of 40,000 miles (24,000 business miles) during 2012 and receives a reimbursement of 40 cents per business mile from her employer.
a. what amount is deductible (before the 2% nondeductible floor) if Michelle uses the standard mileage method?
b. what amount is deductible (before the 2% nondeductible floor) if Michelle uses the actual cost method?
c. can taxpayers switch back and forth between the mileage and actual method each year?

# 64
Moving Expenses. Michael graduated from New York University and on February 1, 2012, accepts a position with a public accounting firm in Chicago. Michael is a resident of New York. In March, Michael travels to Chicago to locate a house and starts to work in June. He incurs the following expenses, none of which are reimbursed by the public accounting firm:
Automobile expense enroute
(1,000 miles at 23 cents per mile—standard mileage rate) $230
Cost of meals en route 100
House-hunting trip travel expenses 1,400
Moving van expenses 3,970
Commission on the sale of Michael’s NY condominium 3,500
Points paid to acquire a mortgage on Michael’s in Chicago 1,000
Temporary living expenses for one week in Chicago
(hotel and $100 meals) 400
Expenses incurred in decorating the new residence 500
Total expenses 11,100

a. what is Michael’s moving expense deduction?
b. how are the deductible expenses classified on Michael’s tax return?
c. how would your answer to Part a change if all of Michael’s expenses were reimbursed by his employer and he received a check for $11,100?

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