During the year, Brenda has the following expenses related to her employment:
|
Airfare |
$8,500 |
|
Meals |
4,000 |
|
Lodging |
4,900 |
|
Transportation while in travel status (taxis and limos) |
940 |
|
Entertainment of clients |
8,000 |
Although Brenda renders an adequate accounting to her employer, she is reimbursed for only $12,000 of the above expenses. What are Brenda’s tax consequences based on the following assumptions?
a. The $12,000 reimbursement does not designate which expenses are covered.
b. The reimbursement specifically covers only the meals and entertainment expenses.
c. The reimbursement covers any of the expenses other than meals and entertainment.
d. If Brenda has a choice of reimbursement procedures [parts (a), (b), or (c) above], which should she select? Why?