Question

Joan Frazier was just hired as an employee by SJR Restaurants, Inc., a Delaware Corporation domiciled in Colorado. Ms. Frazier maintains a residence in Orange County, California, so her children may attend the schools of her choice and so that her husband may be employed there as a leading plastic surgeon.

SJR has just opened three (3) restaurants in Utah, Nevada, and Idaho. SJR requires Ms. Frazier set up the general ledger accounting system at each restaurant. SJR estimates it will take Ms. Frazier 14 months of continuous, full time work (40 hours per week, 4 weeks per month) to set up the systems. SJR requires Ms. Frazier to rotate her time. That is, to spend time at each restaurant at least once a calendar quarter. Each restaurant has an office for the accounting function, although the offices are so small that Ms. Frazier does a majority of her work from hotel rooms near the restaurants.

Ms. Frazier reports back electronically to SJR. Ms. Frazier is never required to go to Colorado. SJR does not reimburse Ms. Frazier for her lodging, travel, or meal expenses.

May Ms. Frazier deduct lodging, travel, and meal expenses?

Note 1: Ignore limitations and phase outs and cut backs and whether the putative deductions might be above the line or below the line. Ignore Alternative Minimum Tax.

Note 2: This is your chance to show the research skills you've learned. You must cite the relevant code section(s), and at least three Supreme Court cases.

The appropriate format for tax briefings is as follows. Also include your name and the date for this class.

Subject

Facts

Taxpayer yada yada yada. Note: This should not be more than one paragraph.

Issue

May taxpayer deduct yada yada yada? Note: This is usually one sentence.

Conclusion

In this situation, yada yada yada. Note: This is usually three sentences or less.

Analysis

Code section xx(a) contains.......It states...... Reg. sec. clarifies......   Rev. Ruling...... Court case XXXX vs. XXX holds that......

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Answer 1

Jo fraizer is an official employee hired by the employer ‘delaware corporation’ of SJR Restaurants. The company expects the employee to work for over an year, 14 months-40 hours/week for 4weeks a month which is an extensive project to set up the restaurant systems. Since SJR just opened 3 branches in UTAH, NEVADA and IDAHO which will require more efforts initially, Mr. joe will require to give more time there. Also, shes is asked to visit all these 3 newly opened branches at least once in 3 months to follow up the accounting function which id again a time consuming job. And also when she is allowed to work from their particular offices, but due to lack of proper office space at workshe is not able to work at the branch office and ends up working at the lodge/hotel room for more productivity and efficiency for which more expenses are incurred. Now the fact remains that the comapny doesn’t reimburse for the stay at the hotel/lodge. Jo fraizer is given a long 14 month project requiring various skills and a lot of time to execute his appointed tasks, and the fact that she works from the hotel room is only to take care of maximum efficiency and proper target delivery. That is for the benefit of the company and to be able to finish the work on time. Also that he is limited on time of 14 months and still thinking for the efficiency of the company and give maximum output in the given time shows that he cares to finish things on targeted time. Hence, unless it is clearly mentioned in the policy of not to include any of those of the company he should definitely deduct travelling, lodging and meal expenses as it is for the benefit of the company and not for personal leisure purposes. And if not denied in the policy or not, he should be eligible for reimbursement for sure.