Question

Ernest went to Boston to negotiate several new contracts with clients. His airfare was $400 and he spent $150 per day on lodging, $40 per day on meals, and a total of $60 on cab fare

a)If Ernest spends 2 days on business and 3 days on personal activities, he can deduct $160 of his airfare.
b)If Ernest spends 3 days on business and 2 days on personal activities, he can deduct $120 of the meal costs.
c)NEITHER

Answer 1

Ernest can deduct $160 of his airfare if he spends 2 days on business and 3 days on personal activities. He can deduct $120 of the meal costs if he spends 3 days on business and 2 days on personal activities. Neither option involves the deduction of any costs.

Step-by-step explanation:

Based on the given information, let's analyze each situation:

a) If Ernest spends 2 days on business and 3 days on personal activities, he can deduct $160 of his airfare. This can be calculated by subtracting the personal days (3 days) from the total airfare ($400) and dividing it by the total number of days (5 days), resulting in $80 per day. The business days (2 days) at $80 per day result in a deduction of $160.

b) If Ernest spends 3 days on business and 2 days on personal activities, he can deduct $120 of the meal costs. This can be calculated by subtracting the personal days (2 days) from the total meal costs ($40 per day for 5 days) and dividing it by the total number of days (5 days), resulting in $32 per day. The business days (3 days) at $32 per day result in a deduction of $96.

c) Neither option involves the deduction of any costs. In this case, Ernest wouldn't be able to deduct any expenses either from the airfare or the meal costs.