In the current year, Mike’s AGI is $50,000. Mike has no miscellaneous itemized deductions other than the employment-related expenses listed below. Mike attends a professional trade association convention in Los Angeles. He spends three days at the meeting and two days vacationing before the meeting. Mike’s total expenses include the following:
Airfare …………………………………………………….. $ 450
Meals ($50 per day) ……………………………………….. 250
Hotel ($100 per day) ……………………………………….. 500
Entertainment of customers (business is discussed) ……….. 500
Total ………………………………………………………$1,700
Mike’s employer reimburses him for the business-related expenses and, accordingly, Mike receives a reimbursement of $1,400 ($450 + 150 + 300 + 500).
a. How much can Mike deduct for employment-related expenses?
b. How is the reimbursement reported on Mike’s tax return?
c. How much of the reimbursement may Mike’s employer deduct?
d. How would your answers change if Mike spent two days at the meeting and three days vacationing? Assume Mike received no reimbursement from his employer.