:9-52 Employment-Related Expenses. Mike incurs the following employment-related expenses
in the current year:
Actual automobile expenses $ 2,500
Moving expenses (deductible under Sec. 217) 4,000
Entertainment expenses 1,500
Travel expenses (including $500 of business meals) 2,500
Professional dues and subscriptions $500
Professional dues and subscriptions$11,000
Mike’s AGI is $120,000 before any of the above expenses are deducted. None of the
expenses listed above are reimbursed by Mike’s employer. He has no other miscellaneous
itemized deductions and does not use the standard deduction.
a. What is the amount of Mike’s deduction for employment-related expenses?
b. How are these items reported in Mike’s tax return?
I:9-54 Unreimbursed Employee Expenses. In the current year, Mary incurs $3,600 of unreimbursed
employment-related travel and entertainment expenses. These expenses include
Taxi fare 100
Meals eaten alone while
away from home on business 300
Business meals with customers at
which business is discussed 500
Entertainment of customers 500
Mary also pays $1,000 of investment counseling fees and $500 of tax return preparation
fees in the current year. Mary’s AGI is $70,000.
a. What is the total amount of Mary’s deductible expenses?
b. Are the deductible expenses classified as for AGI or from AGI?
I:9-55 Travel Expenses. Marilyn, a business executive who lives and works in Cleveland,
accepts a temporary out-of-town assignment in Atlanta for a period of ten months.
Marilyn leaves her husband and children in Cleveland and rents an apartment in Atlanta
during the ten-month period. Marilyn incurs the following expenses, none of which are
reimbursed by her employer:
Airfare to and from Atlanta $ 800
Airfare for weekend trips to visit her family 8,000
Apartment rent 10,000
Meals in Atlanta 8,500
Entertainment of customers 2,000
a. Which of the expenditures listed above (if any) are deductible by Marilyn (before any
limitations are applied)?
b. Are each of these expenditures classified as for AGI or from AGI deductions?
c. If Marilyn’s AGI is $120,000, what is the amount of the deduction for the expenditures?
d. Do the tax consequences change if Marilyn’s assignment is for a period of more than
one year and is for an indefinite period rather than a temporary period?
e. Do the tax consequences in Parts a through c change if it was realistically expected that
the work would be completed in ten months but after the ten-month period Marilyn is
asked to continue for seven more months and if an additional $10,000 of travel
expenses are incurred during the extended period?