Audry, age 38 and single, earns a salary of $56,200. She has interest income of
ID: 2543469 • Letter: A
Question
Audry, age 38 and single, earns a salary of $56,200. She has interest income of $1,450 and has a $2,000 long-term capital loss from the sale of a stock investment. Audry incurs the following employment-related expenses during the year: Transportation Meals Lodging Entertaining clients Professional dues and subscriptions $3,675 1,340 2,680 2,300 160 Under an accountable plan, Audry receives reimbursements of $3,047 from her employer. Determine what percentage of the reimbursement applies to meals and entertainment. Round the percent answer to nearest whole percent. Use this value in subsequent computations when required Determine Audry's unreimbursed deduction by completing the table below Round computations to the nearest dollar when required. Use rounded amounts in subsequent computations. If amount is zero, enter 0 Other Than Meals and Entertainment Meals and Entertainment Lodging Transportation Professional dues and subscriptions Meals and entertainment Total expenses Less: Reimbursement (deductible for AGI) Unreimbursed portion Less: 50% limitExplanation / Answer
1) Meals and Entertainment expense = $1,340+$2,300 = $3,640
Total expenses = Transportation+Meals+Lodging+Entertainment+Professional dues
= $3,675+$1,340+$2,680+$2,300+$160 = $10,155
Percentage of reimbursement applies to meals and entertainment = Meals and entertainment exp./Total Expenses
= $3,640/$10,155 = 0.36 or 36%
It means that 36% of the reimbursement applies to meals and entertainment (i.e. 36%*$3,047 = $1,097) and the balance of $1,950 ($3,047-$1,097) relates to other employees expense.
2) Calculation of Audry's unreimbursed deduction (Amts in $)
Audry's AGI = Salary+Interest Income-Long term capital loss
= $56,200+$1,450-$2,000 = $55,650
Total unreimbursed employee expenses of $5,836 ($4,565+$1,271) will reduce by 2% of AGI (i.e. $55,650*2% = $1,113).
Total employee deductions from AGI allowed = $5,836-$1,113 = $4,723
Therefore, Audry's AGI is $55,650. Audry's total employee deductions from AGI are $4,723.
Particulars Other Than Meals and Entertainment Meals and Entertainment Lodging 2,680 Transportation 3,675 Professional dues and subscriptions 160 Meals and Entertainment 3,640 Total Expenses 6,515 3,640 Less: Reimbursement (deductible for AGI) (1,950) (1,097) Unreimbursed Portion 4,565 2,543 Less: 50% limit - (1,272) Unreimbursed deduction from AGI before limitation 4,565 1,271Related Questions
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