Question

Exercise 9-16 (LO. 3) Brenda, a self-employed taxpayer, travels from Chicago to Barcelona (Spain) on business. She is gone 10 days (including 2 days of travel) during which time she spends 5 days conducting business and 3 days sightseeing. Her expenses are $1,500 (airfare), $200 per day (meals), and $400 per night (lodging). Because Brenda stayed with relatives while sightseeing, she only paid for 5 nights of lodging. Compute Brenda's deductions for the following expenses.

AND THE AND ANSWER IS NOT 400 OR 200 OR 1000

Answer 1

This trip is qualified as business trip. Because out of 10 days total 7 days counted for doing business. A trip is considered as business trip if majority of trip time is used for doing business including travel time. Here, the percentage of doing business is 70%

Following are the deductions:

Airfare	$ 1,500
Lodging ( $ 400 X 8 days )	$ 3,200
Meals ( $ 200 X 10) X 50%	$ 1,000
Total deduction	$ 5,700

Note: If as a self-employed person, you stayed at your relatives house in different nation not more than 15 days, total lodging expenses can be deductible, irrespective of payment done or not.

Airfare is totally deductible because it has no relationship with any extravagance during international travelling .

Meal expenses is deductible at 50%