Question

Kim works for a clothing manufacturer as a dress designer. During 2019, she travels to New York City to attend five days of fashion shows and then spends three days sightseeing. Her expenses are as follows:Airfare $2,050Lodging (8 nights) 2,665Meals (8 days) 2,460Airport transportation a.) presuming no reimbursement, how much can kim deduct as to the trip?

b). would the tax treatment of Kim's deduction differ if she was an independent contractor (rather than an employee)? Explain.

Answer 1

a. $4,619.38

b. The explanation is shown below:-

Step-by-step explanation:

The computation of total deduction of Kim presuming no reimbursement is shown below:-

Full Airfare $2,050

Lodging $1665.63

($2,665 × 5 ÷ 8)

Meals (For 5 days, Limit of 50%) $768.75

($2,460 × 5 ÷ 8 × 50%)

Full Airport transportation $135

Total deduction $4,619.38

An employee's unreimbursed travel costs are deducted from the Adjusted Gross Income (AGI) floor by 2 per cent.

b. The explanation of total deduction of Kim if she was an independent contractor is shown below:-

Full Airfare $2,050

Lodging $1665.63

($2,665 × 5 ÷ 8)

Meals (For 5 days, Limit of 50%) $768.75

($2,460 × 5 ÷ 8 × 50%)

Full Airport transportation $135

Total deduction $4,619.38

Kim's deduction tax treatment would be the same even though she had been an independent contractor. The gross deductions will remain the same, that is to say $4,619.38