During the year, John (a self-employed management consultant) went from Milwaukee to Hawaii on business. Preceding a five-day business meeting, he spent four days vacationing at the beach. Excluding the vacation costs, his expenses for the trip are: Airfare $3,200 Lodging 900 Meals 800 Entertainment 600 Presuming no reimbursement, deductible expenses are:

Answer and Explanation:

Business deduction according to IRS rules:

Particular                                                      Amount

Expenses on travelling (100%)                     $3,200

Meal (50% deductible) $800 × 50%            $400

Entertainment (No deduction)                     $0

Loading charges (100%)                               $900  

Total deductible expenses                         $4,500

$2.00 for three shots.