Question

1.  Greg flew from Kansas City to Boston on Thursday to attend business on Friday. He could have flown home Friday evening with no additional airfare. He stayed over Saturday through Monday to attend a sporting event and vis­it the historic sights. Greg paid airfare of $300, meals of $26 per day (after reduction to 50 percent) and lodging of $59 per day. Greg may deduct how much?

2. Shaoq is a very successful self-employed hair stylist who incurred the following expenses in a trade or business:

Meals with clients where business was discussed                                         $ 2,000

Meals with clients where business was not discussed                                        750

Meals served at employee meetings                                                                      400

Employee meals while away from home overnight

(reimbursement given to employees)                                                                 500

Shaoq’s meals while away from home overnight                                                 500

Tickets to dramatic performance with clients associated with business           300

     How much of the above may Shaoq deduct?

Answer 1

PART – 1)

Deductible expenses = Air fare + Meals for three days + Lodging expenses for three days

                                  = $300 + [($26/0.50)*3 days] + ($59*3 days)

                                  = $300 + $156 + $177

                                  = $633

PART – 2)

Deductible expenses = 50% of meals with clients where business was discussed + 50% of meals served during employee meeting + 50% of Employee meals while away from home overnight + 50% of Shaoq’s meals while away from home overnight

= ($2,000*50%) + ($400*50%) + ($500*50%) + ($500*50%)

= $1,000 + $200 + $250 + $250

= $1,700