Kim works for a clothing manufacturer as a dress designer. During 2020, she travels to New York City to attend five days of fashion shows and then spends three days sightseeing. Her expenses are as follows:
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Assume lodging/meals are the same amount for the business and personal portion of the trip ($374 per day for lodging and $345 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.
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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 $
Question 2
Stork Associates paid $77,400 for a 20-seat skybox at Veterans Stadium for eight professional football games. Regular seats to these games range from $65 to $195 each. At one game, an employee of Stork entertained 18 clients. Stork furnished food and beverages for the event at a cost of $3,600. The game was preceded by a bona fide business discussion, and all expenses are adequately substantiated.
How much may Stork deduct for this event?
$
| a. Determine Kim's business expenses, presuming no reimbursement. | |
| Airfare | $ 2,300.00 |
| Lodging (5 nights)=(374 x 5 nights) | $ 1,870.00 |
| Meals (5 days) ($345 x 5 days x 50% (cutback adjustment) | $ 862.50 |
| Transportation | $ 65.00 |
| Total | $ 5,097.50 |
| What amount may she deduct on her tax return? | $ 5,097.50 |
| No allocation of the airfare is necessary as the trip was within the United States. The business portion of the meals ($1725) is subject to the cutback adjustment | |
| $ | |
| b. Would the tax treatment of Kim's deduction differ if she was an independent contractor? | |
| The deductible expenses would be 5097.50 and the expenses would be classified as DEDUCTION FOR AGI |
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