Info: Melissa, a business executive who lives and works in Cleveland, accepts a
ID: 2400957 • Letter: I
Question
Info:
Melissa, a business executive who lives and works in Cleveland, accepts a temporary out-of-town assignment in Atlanta for a period of ten months. Melissa leaves her husband and children in Cleveland and rents an apartment in Atlanta during the ten-month period. Melissa incurs the following expenses, none of which are reimbursed by her employer: ElB (Click the icon to view the expenses.) Read the requirements Requirement a. Which of the expenditures listed above (if any) are deductible by Melissa (before any limitations are applied)? First, designate which of the expenditures are potentially deductible. Deductible Deductible Deductible Deductible, subject to 50% limitation Deductible, subject to 50% limitation Airfare to and from Atlanta Airfare for weekend trips to vist her family Apartment rent Meals in Atlanta Entertainment of customers Now calculate the amount of the deduction for the expenditures before any nondeductible floor limitations are applied. The amount of the deduction for the expenditures, before any nondeductible floor limitations are applied, is $Explanation / Answer
a. The amount of deduction for the expenditures, before any nondeductible floor limitation are applied is Airfare to and from Atlanta $750 Airfare to visit her family $7,200 Apartment rent $9,750 Meals in Atlanta (50% x $8800) $4,400 Entertainment of customers (50% x 1700) $850 Deductible amount $22,950 b. All of these expenditures are classified as from AGI deduction under miscellaneous itemized deduction c. If Melissa's AGI is $160,000, the amount of deduction for the expenditure Melissa can deduct the amount of expenditure under miscellaneous deduction, which is more than 2% of AGI. AGI $160,000 Floor limitation (2%) $3,200 Total amount of expenditures $22,950 Less: Floor limitation ($3,200) Amount of deduction $19,750 d. If Melissa's assignment is for a period of more than one year, the travel expenses will be non deductible e. Tax consequences will not change in Part a to c, if it was realistically expected to complete in ten months, but the additional travel expenses of $9000 for seven more months are non deductible.