Brees Co.requires its employees to adequately account for all reimbursed business expenses.Tracy,an employee of Brees Co.has AGI of $50,000 and submitted for reimbursement the following valid business expenses:
$\begin{array}{lr}
\text { Transportati on costs } & \$ 1,000 \
\text { Meals } & 700 \
\text { Entertainment costs } & 500 \
\text { Hotel costs } & 800
\end{array}$
What are the tax consequences if Brees reimburses Tracy $2,400?
I.Tracy must report $2,400 of income.
II.Tracy can deduct $2,400 of the expenses for AGI and $-0- as miscellaneous itemized deductions,after limitations.

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The Answer of Brees Co.requires its employees to adequately account for all reimbursed business expenses.Tracy,an employee of Brees Co.has AGI of $50,000 and submitted for reimbursement the following valid business expenses:
$\begin{array}{lr}
\text { Transportati on costs } & \$ 1,000 \
\text { Meals } & 700 \
\text { Entertainment costs } & 500 \
\text { Hotel costs } & 800
\end{array}$
What are the tax consequences if Brees reimburses Tracy $2,400?
I.Tracy must report $2,400 of income.
II.Tracy can deduct $2,400 of the expenses for AGI and $-0- as miscellaneous itemized deductions,after limitations.

Brees CoRequires Its Employees to Adequately Account for All Reimbursed Business