Question

Carol, a self-employed CPA, purchases hockey tickets online for $180 and takes a client to the game. Immediately before the game, Carol and the client dine on chicken wings and other food and beverages at the restaurant in the arena, and Carol charges the full $120 bill for dinner on her credit card. During dinner, and at various points throughout the game, they discuss an ongoing project Carlos is working on for the client and a potential new project. Carol will deduct:_______.

a. $75.
b. $150.
c. $380.
d. $530.

Answer 1

As a self-employed CPA, Carol can deduct $150 from her taxable income for the hockey tickets and dinner bill she purchased for her client.

Step-by-step explanation:

Carol, as a self-employed CPA, can deduct business expenses related to her work from her taxable income. In this scenario, the hockey tickets and the dinner bill at the restaurant can be considered as potential business expenses.

The hockey tickets, purchased for $180, can be deducted as an entertainment expense. However, there are limits and restrictions on the amount that can be deducted for entertainment expenses. In general, only 50% of entertainment expenses can be deducted. So, Carol can deduct 50% of $180, which is $90, as an entertainment expense.

As for the dinner bill of $120, Carol can deduct it as a business meal expense. Similar to entertainment expenses, there are also restrictions on the amount that can be deducted for business meals. Currently, the IRS allows a deduction of 50% of the business meal expenses. Therefore, Carol can deduct 50% of $120, which is $60, as a business meal expense.

To calculate the total deduction, we add the deductible amounts for the entertainment expense and the business meal expense: $90 + $60 = $150.

Therefore, Carol can deduct $150 from her taxable income.

Answer 2

$300 is allowable deductions

Step-by-step explanation:

Carol was on a business Tour and the expenses incurred during the meeting are only allowable under the US tax rules, if the tour's main purpose is to benefit the company's business and that the expenses immaterial. So in this case, Carol was out with one of the business client to negotiate the terms and condition or the part of the agreed contract between the two parties which in this case is the ongoing project. So it is proved that the meeting was for professional in terms and the expenses incurred to entertain the client and the employee himself are $180 and $120 are immaterial and equally shared among both.

The whole of the amount $300 ($180 + $120) are allowable under tax rules.