Question

Carol, a self-employed CPA, purchases hockey tickets online for $180 and takes a client to the game. Immediately before the game, Carol and the client dine on chicken wings and other food and beverages at the restaurant in the arena, and Carol charges the full $120 bill for dinner on her credit card. During dinner, and at various points throughout the game, they discuss an ongoing project Carlos is working on for the client and a potential new project. Carol will deduct:_______.
a. $75.
b. $150.
c. $380.
d. $530.

Answer 1

Answer:

$300 is allowable deductions

Explanation:

Carol was on a business Tour and the expenses incurred during the meeting are only allowable under the US tax rules, if the tour's main purpose is to benefit the company's business and that the expenses immaterial. So in this case, Carol was out with one of the business client to negotiate the terms and condition or the part of the agreed contract between the two parties which in this case is the ongoing project. So it is proved that the meeting was for professional in terms and the expenses incurred to entertain the client and the employee himself are $180 and $120 are immaterial and equally shared among both.

The whole of the amount $300 ($180 + $120) are allowable under tax rules.