Scenario 2 – Carl Haas Carl Haas (SSN 226-00-1789) incurred the following expens

Question

Scenario 2 – Carl Haas

Carl Haas (SSN 226-00-1789) incurred the following expenses in his job as an outside sales rep.

Parking fees $120

Business meals $560

Local telephone service $455

Long distance calls for work $420

Office supplies $129

Tolls $ 60

Travel expenses $969 (away from home overnight)

Rental cars $525 (away from home overnight)

Carl’s car was placed in service April 1, 2012, and he drove it a total of 29,634 miles, of which 15,214 was for business use in 2017. He commuted 14 miles per day, round trip, for a total of 250 days. His commuting miles are not included as part of his business miles. He keeps a written record of his mileage. He has chosen to use the standard mileage rate for his vehicle expenses. He was reimbursed, under his employer’s accountable plan, .27 cents per mile to cover auto expenses, and this is not included in his taxable wages on his Form W-2. Carl does not have a second phone line in his home. Carl has another vehicle available for personal use.

Answer the following questions based on Form 2106 you completed for Carl Haas:

1. Select the TOTAL expenses, exclude any limitations such as Meals & Entertainement, etc.
a) $10,791
b) $11,531
c) $10,362
d) $11,426

2. Select the employer reimbursements
a) $4,108
b) $8,001
c) $5,053
d) $7,056

3. Select the total amount of DEDUCTIBLE expenses.
a) $6,534
b) $6,963
c) $7,423
d) $7,598

Instructions: Please answer the multiple-choice questions and show how the computation as to how you arrived at that amount

Explanation / Answer

Answer:-

(1) Total Expenses exclude Any limitation such as Meals & Entertainement are as follows :-

= Parking Exp + Local Telephone Service + Long distance calls for work + Office supplies + Tolls + Travel Exp + Rental Car+ Reimbursement Exp

= $120+ $455+$420+ $ 129 + $60 + $969 + $525 + $8853

= $11,531

So, Answer (b) $11,531

(2) Employer Reimbursement

= Business Purpose Car used (miles) * Reimbusrment (%)

= 15214 * 27%

=$ 4,108

So, Answer (a) $ 4,108

(3) Total Amount of Deductible Expenses are as follows:-

= Total expenses exclude any limitations such as Meals & Entertainement, - Total Employer Reimbursement

= $11,531 - $ 4,108

= $7,423

So, Answer (c) $ 7,423

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