Question

15. During the year, Sophie (a self-employed marketing consultant) went from Omaha to Lima, Peru, on business. She spent four days on business, two days on travel, and four days on vacation. Disregarding the vacation costs Sophie's expenses are: Airfare $3,000 Lodging 800 Meals 600 Entertainment 400 Sophie's deductible expenses are: a. $4,300. b. $2,900. c. $2,800. d. $2,500. e. None of these.

Answer 1

e. None of these.

Calculation of actual expenses deductible: $3,100:

No. of days for Business	6
No. of days for Vacation	4
Total no. of days for travel	10
% of business = 6/10	60%
			Amount Deductible		Remarks
Particulars	Amount spent	For business purpose	Formula	Amount
Airfare	3,000	60%	(3000 X 60%)	1,800	As 6 out of 10 days dedicated to business, hence 60% deductible. If the business travel would have been for atleast 7 days, all airfare would have been deductible.
Lodging	800	100%	(800 X 100%)	800	Full lodging expenses allowed
Meals	600	50%	(600 X 50%)	300	As per rule, 50% is deductible
Entertainment	400	50%	(400 X 50%)	200	As per rule, 50% is deductible
Total amount deductible				3,100