contestada

Stork Associates paid $65,400 for a 20-seat skybox at Veterans Stadium for eight professional football games. Regular seats to these games range from $55 to $165 each. At one game, an employee of Stork entertained 18 clients. Stork furnished food and beverages for the event at a cost of $2,200. The game was preceded by a bona fide business discussion, and all expenses are adequately substantiated.
a. Stork can deduct $ for this event.
b. If there was no bona fide business discussion either preceding or after the event, there is and the deduction would be $.

Respuesta :

Answer: a. $1100

b. $0

Explanation:

It should be noted that according to IRS, 50% of the expenses on business meals will be deducted by tax payers when some conditions are met such as:

• Expenses incurred shouldn't be costly or extravagant.

• Expenses are necessary.

• Expenses on meal were incurred separately from expenses on entertainment.

• The taxpayer was present there when the expenses were incurred.

Based on the above,

a. The amount that Stork can deduct will be:

= 50% × $2200

= 0.5 × $2200

= $1100

b. If there was no bona fide business discussion either preceding or after the event, the deduction will be $0 because in such case, no expenses were incurred on food or entertainment.

Otras preguntas