Heather Is an Advertising Executive with a Major Advertising Agency

Heather is an advertising executive with a major advertising agency. A significant part of her job is selling advertising campaigns to clients and potential clients. Heather spent $6,000 taking clients and potential clients to lunch and dinners in restaurants and discussed advertising campaigns during the meals. For some major accounts, the dinners were followed by taking the clients to Broadway shows. Heather is reimbursed for these meals and tickets after she turns in receipts and other appropriate documentation. What is the appropriate treatment of the reimbursement?

A) Heather will include the reimbursement in income, but she will not be allowed any deduction for the meals and entertainment expense.
B) Heather will exclude the reimbursement from income and will not take any deduction for the expenses.
C) Heather will include the reimbursement in income to the extent of 50% of the meals and 100% of the entertainment.
D) Heather will include the reimbursement in income, but she will be allowed an itemized deduction for the expenses.