Question

1. Tom is a single taxpayer, and incurs $ 2,500 of Business expenses in being an accountant.

a) How would Tom treat his business deductions if he was self employed?

b)How would Tom treat these business expenses if he was an employee and his employer did not reimburse expenses to him?

c)If Tom was an employee and his employer paid him a flat $ 2,000 for expenses (not an accountable plan), how would Tom treat the reimbursement and the $2,500 in business expenses?

d.) Tom received $ 2,500 from his employer for reimbursed expenses under an accountable plan. How would Tom treat the reimbursements and the expenses?

Answer 1

ANSWER

Every treatment in below case is standardized. No futhe explanation require. a) Being a self employed, he will deduct $2500 as business expense from Gross Business Income. As employee, he can deduct these unreimbursed expenses as Misc. Expenses under itemized deduction with 2% floor limit. As employee, he will reduce the reimbused amount from gross expense and can claim remaining amount of $500 (2500-2000) as Misc. Expenses under itemized deduction with 2% floor limit. d) As employee, if he got the full remibursement of business expense. He will adjust the reimbusement against business expense. He can't claim or get deduction futher for the same. Because he has received the full consideration. Ase

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