Answer and Explanation:
a. The computation of the amount deducted as if there is no reimbursement is
= Airfare charges + lodging for 5 days + meals for 5 days at 50% limit + full airport transportation
= $1,500 + $1,920 × 5 days ÷ 8 days + $1,440 × 5 days ÷ 8 days × 50% + $120
= $1,500 + $1,200 + $450 + $120
= $3,270
The unreimbursement travel expenses for an employee is 2% of adjusted gross income
b. The tax treatment in case of the independent contractor
= Airfare charges + lodging for 5 days + meals for 5 days at 50% limit + full airport transportation
= $1,500 + $1,920 × 5 days ÷ 8 days + $1,440 × 5 days ÷ 8 days × 50% + $120
= $1,500 + $1,200 + $450 + $120
= $3,270
It would remain the same in case of the independent contractor also.
