Kim works for a clothing manufacturer as a dress designer. She travels to New Yo

Question

Kim works for a clothing manufacturer as a dress designer. She travels to New York City to attend five days of fashion shows and then spends three days sightseeing. Her expenses are as follows:

Airfare            $1,050

Lodging (8 nights)    1,365

Meals (8 days)          1,260

Airport transportation          60

Assume lodging/meals are the same amount for the business and personal portion of the trip ($171 per day for lodging and $158 per day for meals).

If required, round all interim calculations to nearest dollar.

a. Determine Kim's deductible expenses, presuming no reimbursement.

b. Would the tax treatment of Kim's deduction differ if she was an independent contractor? The deductible expenses would be $_______?

Explanation / Answer

SOLUTION

A.

No allocation of the airfare is necessary as the trip was within the United States. The business portion of the meals ($790) is subject to the cutback adjustment.

(B) The expense would be classified as a deduction for AGI and the deductible expenses amount would be $2,360.

Particulars Amount ($) Airfare 1,050 Lodging ($171 *5) 855 Meals ($158 * 5 = $790 * 50% = $395) 395 Airport transportation 60 Total 2,360

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