Ms. Latricia Mode has worked diligently for a small company in Edmonton for several years, but has
Question:
Ms. Latricia Mode has worked diligently for a small company in Edmonton for several years, but has become increasingly dissatisfied with her progress in the organization. After the president's totally incompetent daughter was promoted, she resigned as of May 1, 2020.
She had already been searching for a new position and, after a much-needed vacation in Europe, she found a position in Winnipeg that offered her outstanding opportunities for promotion. After some negotiation about benefits, she agreed to accept the position at a starting salary of $4,000 per month. She assumed her new duties on November 1, 2020.
After accepting the job, Latricia listed her Edmonton house for sale and flew to Winnipeg in order to find living quarters. After 3 days she purchased a suitable house that would be available on October 28. In order to acquire furnishings, she remained in Winnipeg an additional 4 days after the acquisition. Her expenses for this 7 day trip were as follows:
Air Fare (Edmonton - Winnipeg, Return) $ 586
Car Rental (7 Days At $45) 315
Hotel (7 Nights At $122) 854
Food (7 Days - Total) 455
Her house proved difficult to sell because a safe injection site had opened across the street and many homes in her neighborhood were for sale. The one offer she received wanted possession on October 1. Reluctantly, she accepted the offer.
On October 1, Latricia supervised the final packing of her property and its removal from the old house. She then spent 2 days in an Edmonton hotel while she finalized arrangements for her departure. Expenses during these 2 days were as follows:
Hotel (2 Nights At $115) $230
Food (2 Days - Total) 26
On October 3, she leaves Edmonton by automobile, arriving in Winnipeg on October 7. The trip is 1,304 kilometers. As her new residence is not yet available, she lives in a hotel in Winnipeg until October 28. Her expenses for the period October 3 through 28 are as follows:
Gasoline Purchased During The Trip $ 297
Hotel (4 Nights En Route+21 Nights In Winnipeg At $135) 3,375
Food (25 Days - Total) 1,820
She received the following statements from her attorney:
Real Estate Commission - Old Home $ 16,800
Legal Fees - Old Home 1,800
Unpaid Property Taxes On Old Home To Date Of Sale 1,350
Legal Fees - New Home 1,950
On moving into the new residence, Latricia is required to pay the moving company a total of $2,850. This fee includes $725 for the 23 days of storage required because the new home was not available when the furnishings arrived.
Latricia's only income for 2020 was employment income and the net amounts to be included in her Net Income For Tax Purposes are as follows:
Old Job (4 Months) $14,000
New Job (2 Months) 8,000
Net Employment Income $22,000
Latricia's new employer did not provide any reimbursement for moving expenses. Latricia will use the simplified method of determining vehicle and food costs in calculating her moving expenses. Assume that the relevant flat rate for vehicle expenses is $0.58 and the flat rate for meals is $51 per day.
Required: Calculate the maximum allowable moving expenses that Latricia can deduct from her Net Income For Tax Purposes for 2020 and any amount that can be carried forward to a subsequent year.
Expert Answer:
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