Question

Kim works for a clothing manufacturer as a dress designer. During 2020, she travels to New York City to attend five days of fashion shows and then spends three days sightseeing. Her expenses are as follows:
Airfare $1,800
Lodging (8 nights) 2,340
Meals (8 days) 2,160
Airport transportation 115

Assume lodging/meals are the same amount for the business and personal portion of the trip ($293 per day for lodging and $270 per day for meals).

Required:
a. Presuming no reimbursement, how much can kim deduct as to the trip?
b. Would the tax treatment of Kim's deduction differ if she was an independent contractor (rather than an employee)? Explain.

Answer 1

Answer: See explanation

Explanation:

a. Presuming no reimbursement, how much can kim deduct as to the trip?

Airfare = $1,800

Add: Lodging = $2340 × 5/8 = $1462.50

Add: Meals = $2160 × 5/8 × 50% = $675

Add: Airport transportation = $115

Total deduction = $4052.50

b. Would the tax treatment of Kim's deduction differ if she was an independent contractor (rather than an employee)? Explain

The tax treatment of Kim's deduction if she was an independent contractor will be:

Airfare = $1,800

Add: Lodging = $2340 × 5/8 = $1462.50

Add: Meals = $2160 × 5/8 × 50% = $675

Add: Airport transportation = $115

Total deduction = $4052.50

Therefore, the tax treatment of Kim's deduction still remains the same.