Question

Justin Peter earned a salary of $30,000 during 2019. During the year, he was required by his employer to take several overnight business trips, and he received an expense allowance of $1,500 for travel and lodging. In the course of these trips, he incurred the following expenses which were either adjustments to income or deductions from adjusted gross income. Travel $1,100 Lodging 500 Entertainment of customers 400 What is Justin’s adjusted gross income if he does not account to his employer for the expenses

A $30,000B $29,900C $29,500D $31,500

Answer 1

The answer is: D) $31,500

Step-by-step explanation:

If Justin didn't account his expenses to his employer, then any extra amount given to him should be added to his gross income. In Justin's case his gross income should be $31,500 ($30,000 + $1,500). On the other hand, if he would have accounted his expenses to his employer, then the $1,500 wouldn't be added to his gross income.