Melissa recently paid $875 for round-trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $280 fee to register for the conference, $435 per night for three nights' lodging, $275 for meals, and $235 for cab fare. (Leave no answers blank. Enter zero if applicable.) (Round your answer to the nearest dollar amount.)
a. What amount of travel costs can Melissa deduct as business expenses? Deductible amount
b. Suppose that while Melisa was on the coast, she also spent two days sightseeing the national parks in the area. To do the sightseeing, she paid $1,740 for transportation,$820 for lodging<and $360 for meals during this part of her trip, which she considers personal in nature. What amount of travel cost can Mellisa deduct as a business expense?
c. Suppose that Mellisa made the trip to San Fransisco primarily to visit the national parks and only attended the business conference as an incidental benefit of being present on the coast at that time. What amount of airfare can Mellisa deduct as a business?
d. Suppose that Mellisa permanent resident and business was located at San Fransisco. She attended the conference in Sa Fransisco a paid $280 for the registration fee. She drove 144 miles over the course of three days and paid $166 for parking at the conference hotel. In addition, she spent 4310 for breakfast and dinner over the three days of the conference. She bought breakfast on the way to the conference hotel and she bought dinner on her way home each night from the conference. What amount of travel costs can Mellisa deduct as a business expense? (use standard mileage rate .do not round intermediate calculations. round your answers to the nearest dollar amount)
Business Expenses and Taxes
The Internal Revenue Service ("IRS") sets laws forth that describe types of business expenses that are deductible. The IRS also describes expenses that are not deductible. It is important for a business owner to understand what type of expenses are deductible in order to minimize one's tax liability. Also, sound records of transactions must be kept in order to provide support.
Answer and Explanation:
a) $2,833. This amount assumes that all the expenses are considered business in nature and Melissa wasn't reimbursed for any of the expenses noted. Deductible expenses include: $875 for round-trip airfare, $280 for conference registration fee, $1,305 for lodging, $138 for meals (only 50% is deductible), and $235 for cab fare.
b) $2,833. This amount assumes that all the expenses are considered business in nature and Melissa wasn't reimbursed for any of the expenses noted. Thus, she canonly deduct the business expenses in part a because they are business in nature. Personal travel is not deductible.
c) $0. Airfare was purchased with intent for personal travel; therefore, Melissa cannot deduct it.
d) $530. This amount assumes that all the expenses are considered business in nature and Melissa wasn't reimbursed for any of the expenses noted. Deductible expenses include: $280 for conference registration fee, $84 for mileage ($0.58/mile IRS standard mileage rate), and $166 for parking. Meals cannot be deducted because Melissa wasn't required to stay overnight away from her permanent residence.
Learn more about this topic:
from Finance 102: Personal FinanceChapter 3 / Lesson 2