Sarah Incurred Employee Business Expenses of $5,000 Consisting of $3,000

question 146

Multiple Choice

Sarah incurred employee business expenses of $5,000 consisting of $3,000 business meals and $2,000 customer entertainment.She provided an adequate accounting to her employer's accountable plan and received reimbursement for one-half of the total expenses.How much of the meals and entertainment will be deductible by Sarah without consideration of the 2% of AGI limit?

• A)$0
• B)$1,250
• C)$2,500
• D)$5,000

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Definitions:

Partnership Agreement

A contract between partners in a business that outlines the terms, conditions, and distribution of profits and losses.

Dissolution

The process of legally dissolving a corporation or partnership, effectively terminating its existence.

Winding Up

The process of closing a business, paying off creditors, and distributing any remaining assets to the owners or shareholders.

Liquidation

The process of converting a company's assets into cash to pay off creditors before ceasing operations or undergoing reorganization.