Question

# 1.Melissa recently paid \$600 for round-trip airfare to San Francisco to attend a business conference for...

1.Melissa recently paid \$600 for round-trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses:
\$250 fee to register for the conference,
\$300 per night for three night’s lodging,
\$200 for meals, and
\$150 for cab fare.

What amount of the travel costs can Melissa deduct as business expenses?

2.Kimberly is a self-employed taxpayer. She recently spent \$1,000 for airfare to travel to Italy. On the trip, she spent 6 days on personal activities and 4 days on business activities. What amount of the airfare is deductible?

3. Kimberly is a self-employed taxpayer. She recently spent \$1,000 for airfare to travel to Italy. On the trip, she spent 4 days on personal activities and 6 days on business activities. What amount of the airfare is deductible?

4.Renee operates a proprietorship selling collectibles over the web, and last year she purchased a building for \$24 million for her business. This year, Renee’s proprietorship reported revenue of \$86 million and incurred total expenses of \$77.6 million. Her expenses included cost of goods sold of \$48.5 million, sales commissions paid of \$6.9 million, \$9.5 million of interest paid on the building mortgage, and \$12.7 million of depreciation. What is the maximum amount of business interest expense that Renee can deduct this year?

1. Amount of the travel costs can Melissa deduct as business expenses

Airfare=600

Fee to register conference =250

Night's lodging=900(300×3)

Meals=100(200×50%)

Cab fare=150

Therefore \$2000 can deduct as business expenses.

2. In this case the amount of airfare deductible is \$0 since the primary purpose of the trip appears to be personal.

3. In this case the amount of airfare deductible is \$600(1000×6÷10) since the primary purpose of the trip appears to be business, she may deduct the portion of the airfare allocated to the business trip.

4. Income before tax =\$ 86 million

Less. Total expenses =77.6million

Income after expenses \$8.4 million

Interest (30.6×30%) =\$9.18million

Thus, business interest expense that can deduct is \$9.18million.

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