Steven is a representative for a textbook publishing company.Steven attends a convention which will also be attended by many potential customers.During the week of the convention,Steven incurs the following costs in entertaining potential customers. Having recently been to a company seminar on tax laws,Steven makes sure that business is discussed at the various dinners,and that the entertainment is on the same day as the meetings with customers.Steven is reimbursed $2,000 by his employer under an accountable plan.Steven's AGI for the year is $50,000,and while he itemizes deductions,he has no other miscellaneous itemized deductions.What is the amount and character of Steven's deduction after any limitations?
A)$500 from AGI
B)$500 for AGI
C)$2,000 from AGI
D)$2,000 for AGI

Question

Steven is a representative for a textbook publishing company.Steven attends a convention which will also be attended by many potential customers.During the week of the convention,Steven incurs the following costs in entertaining potential customers.  Having recently been to a company seminar on tax laws,Steven makes sure that business is discussed at the various dinners,and that the entertainment is on the same day as the meetings with customers.Steven is reimbursed $2,000 by his employer under an accountable plan.Steven's AGI for the year is $50,000,and while he itemizes deductions,he has no other miscellaneous itemized deductions.What is the amount and character of Steven's deduction after any limitations?
A)$500 from AGI 
B)$500 for AGI 
C)$2,000 from AGI 
D)$2,000 for AGI

Quizplus · Accepted Answer

A)Since there was an accountable plan,no amount is included in income.Excess costs are deducted from AGI as a miscellaneous itemized deduction.The excess expenses are first subject to the 50% limitation and then subject to the 2% nondeductible floor.
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Steven Is a Representative for a Textbook Publishing Company