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:
$\begin{array}{lr}
\text {Transportation costs } &\$ 1,000 \
\text { Meals } &700 \
\text { Entertainment costs } &500 \
\text { Hotel costs } &800
\end{array}$
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.

Question

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:
$\begin{array}{lr}
 \text {Transportation costs } &\$ 1,000 \
 \text {  Meals } &700 \
 \text { Entertainment costs } &500 \
 \text {  Hotel costs } &800
\end{array}$
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.

Quizplus · Accepted Answer

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:
$\begin{array}{lr}
 \text {Transportation costs } &\$ 1,000 \
 \text {  Meals } &700 \
 \text { Entertainment costs } &500 \
 \text {  Hotel costs } &800
\end{array}$
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