: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

the following:

Airfare $1,500

Taxi fare 100

Meals eaten alone while

away from home on business 300

Laundry 50

Lodging 650

Business meals with customers at

which business is discussed 500

Entertainment of customers 500

Total 3600

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

Total $29,300

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?