ch09 Employee Expenses and Deferred Compensation.ppt

Chapter 9
Employee Expenses and pensation
Learning Objectives
Determine the proper classification and deductibility of travel and transportation expenses
Determine the proper deductible amount for entertainment expenses under the 50% disallowance rule
Identify deductible moving expenses and determine the amount and year of deductibility
Learning Objectives
Describe the requirements for deducting education expenses
Determine whether the expenses of an office in the home meet requirements for deductibility and apply the gross e limitations
Discuss the tax treatment requirements for various pensation arrangements
Classification Of Employee Expenses
Nature of employment relationship
Limitations on Unreimbursed employee expenses
Nature Of Employment Relationship
Significant tax consequences flow from the characterization of a taxpayer as an employee
Vs.
Self-employed (independent contractor)
Limitations On Unreimbursed Employees
Unreimbursed employee expenses are classified as miscellaneous itemized deductions. Total of miscellaneous itemized deductions are reduced by 2% of AGI before any tax benefit realized
If total miscellaneous itemized deductions do not exceed 2% of AGI or if total allowable itemized deductions do not exceed standard deduction, Unreimbursed employee expenses may provide no tax benefit; also may affect high-e taxpayers who have 3% scale down of itemized deductions
Travel Expenses
Deductibility of travel expenses
Definition of travel expenses
50% disallowance of business meals
General qualification requirements
Business versus pleasure
Foreign travel
Additional limitations
Nature Of Expenditure
Travel expenses for self-employed individuals and fully reimbursed employee travel expenses are deducted for AGI
Unreimbursed employee travel expenses (whether insufficient or no reimbursement occurs) are deducted as a miscellaneous itemized deduction subject to the 2% nondeductible floor
Definition Of Travel Expenses
Includes transportation,