Question

Kim works for a clothing manufacturer as a dress designer. During 2019, she travels to New York City to attend five days of fashion shows and then spends three days sightseeing. Her expenses are as follows:

Airfare $1,550

Lodging (8 nights) 2,015

Meals (8 days) 1,860

Airport transportation 70

Assume lodging/meals are the same amount for the business and personal portion of the trip ($252 per day for lodging and $233 per day for meals). If an amount is zero, enter "0". If required, round all interim calculations to nearest dollar.

a. Determine Kim's business expenses, presuming no reimbursement.

Airfare $

Lodging $

Meals $

Transportation $

Total $

What amount may she deduct on her tax return? $

b. Would the tax treatment of Kim's deduction differ if she was an independent contractor?

The deductible expenses would be $ and the expenses would be classified as .

Answer 1

a.

The travel expenses that are potentially deductible amount to $3,463:

Airfare $1,550
Lodging (5 nights) 1,260
Meals (5 days): $1165 ($233 × 5) × 50% limit 583
Transportation 70
Total $3,463

No allocation of the airfare is necessary since the trip was within the United States. The business portion of the meals ($1165) is subject to the 50% limit. Because Kim is an employee, these expenses are miscellaneous itemized deductions and from 2018 through 2025 are not deductible.

b.

The amount allowed is the same except that its classification changes to a deduction for AGI.