Indicate the proper treatment in the current year for the underlined amounts.Treat each item as an independent event.Indicate whether the amount is deductible or not;if deductible whether it is deductible FOR or FROM AGI;and indicate the amount of the deduction for the current year considering any relevant limitations.Assume the taxpayer has deductions greater than the standard deduction,has AGI of $69,000 without regard to the following transactions and has no "total" income limitations related to itemized deductions.
-Self-employed salesman spends $1,000 on "directly related" entertainment of his customers.Amount: $500

Question

Quizplus · Accepted Answer

The amount of $500 is deductible as "directly related" entertainment expenses that are incurred in the active conduct of a trade or business. Since the taxpayer is self-employed, the deduction is taken on Schedule C and reduces AGI. The other $500 is not deductible because entertainment expenses are only 50% deductible.

Indicate the Proper Treatment in the Current Year for the Underlined