1- On Monday, Harvey Leonard travels from Chicago to New York on a business trip
ID: 2451590 • Letter: 1
Question
1- On Monday, Harvey Leonard travels from Chicago to New York on a business trip. The trip lasts five days. Three days of the trip are spent conducting business activities and two days spent on personal sightseeing activities. Harvey incurs $550 in airfare costs in going to and returning from New York, $50 a day in expenses for meals, and $100 a day for lodging while in New York.
A. What amount is deductible on Harvey's tax return for travel expenses related to the above activities? Assume Harvey's is self-employed
B. Assume Harvey is an employee and is reimbursed $700 by his employer for the trip. What amount is deductible on Harvey's tax return for u reimbursed travel expenses related to the above activities?
2- To qualify for the immediate expensing election (code sec.179) an asset must meet what qualifications?
Explanation / Answer
Answer:A. Since the trip was primarily for business (three days business versus two days personal), Harvey’s airfare of $550 is fully deductible as a business expense. Other business-related travel expenses of $375 ($50 a day for meals subject to the 50 percent meal limitation and $100 a day for lodging × 3 days) are deductible as business travel expenses. The $300 of expenses incurred while sightseeing ($150 a day in expenses for meals and lodging × 2 days) are nondeductible personal expenses.
Answer:B Business-related expenses of $1,000 $700 reimbursement less the 50 percent meal limitation of $22.50 ($50 × 3 days = $150 $105 reimbursement = $45 × 50% = $22.50), or $277.50, are deductible as travel expenses on Harvey’s tax return, subject to the 2 percent of AGI limitation.
Answer:2 (1) Section 179 property
For purposes of this section, the term “section 179 property” means property—
(A)which is—
(i)tangible property (to which section 168 applies), or
(ii)computer software (as defined in section 197(e)(3)(B)) which is described in section 197(e)(3)(A)(i), to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2014,
(B)which is section 1245 property (as defined in section 1245(a)(3)), and
(C)which is acquired by purchase for use in the active conduct of a trade or business.
Such term shall not include any property described in section 50(b) and shall not include air conditioning or heating units.
https://www.law.cornell.edu/uscode/text/26/179
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