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Augustus1 Augustus1
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6 years ago
Steven is a representative for a textbook publishing company. Steven attends a convention which will also be attended by many potential customers. During the week of the convention, Steven incurs the following costs in entertaining potential customers.

Meal costs   $ 1,500
Entertainment of customers   3,500

Having recently been to a company seminar on the new tax laws, Steven makes sure that business is discussed at the various dinners, and that the entertainment is on the same day as the different dinners. Steven is reimbursed $2,000 by his employer under an accountable plan. Steven's AGI for the year is $50,000, and while he itemizes deductions, he has no other miscellaneous itemized deductions. What is the amount and character of Steven's deduction after any limitations?
A) $500 from AGI
B) $500 for AGI
C) $2,000 from AGI
D) $2,000 for AGI
Textbook 
Prentice Hall's Federal Taxation: 2011: Individuals

Prentice Hall's Federal Taxation: 2011: Individuals


Edition: 14th
Authors:
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We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer
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Yoko900Yoko900
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A
Provide this reason if asked:  Since there was an accountable plan, no amount is included in income. Excess costs are deducted from AGI as a miscellaneous itemized deduction. The excess expenses are first subject to the 50% limitation and then subject to the 2% nondeductible floor.

Eligible expenses ($5,000 - $2,000) × 0.50   $1,500
Minus: 2% of AGI     1,000
Deduction from AGI   $   500
1

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Augustus1 Author
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#2
6 years ago
Your explanation helped, amazing amazing!
We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer
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