Having recently been to a company seminar on tax laws, Steven makes sure that business is discussed at the various meals. Steven is reimbursed $2,000 by his employer under an accountable plan. Steven's AGI for 2018 is $50,000, and he does itemize deductions. For tax purposes, how will Steven treat the $2,000 partial reimbursement and the $2,500 of unreimbursed expenses?

Question

Steven is a representative for a textbook publishing company. Steven attends a convention which will also be attended by many potential customers. During the week of the convention, Steven incurs the following costs in attending the conference and taking potential customers to lunch and dinner to discuss book sales.







A) Reimbursement-exclude from income; unreimbursed expenses-no deduction allowed

B) Reimbursement-exclude from income; unreimbursed expenses-deduct within itemized deductions, after 50% reduction for meal portion

C) Reimbursement-include in income; unreimbursed expenses-no deduction allowed

D) Reimbursement-include in income; unreimbursed expenses-deduct within itemized deductions, after 50% reduction for meal portion

Answer 1

A) Reimbursement-exclude from income; unreimbursed expenses-no deduction allowed

Since there was an accountable plan, the reimbursement is not included in income. Excess costs are not deductible by employees.