Steven Is a Representative for a Textbook Publishing Company $\begin{array}{|l|r|}\hline \text { Meal costs } & \$ 1,500 \\\hline \text { Entertainment of customers } & 3,500 \\\hline\end{array}$

question 28

Multiple Choice

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 entertaining potential customers. $\begin{array}{|l|r|}\hline \text { Meal costs } & \$ 1,500 \\\hline \text { Entertainment of customers } & 3,500 \\\hline\end{array}$ Having recently been to a company seminar on tax laws, Steven makes sure that business is discussed at the various dinners, and that the entertainment is on the same day as the meetings with customers. Steven is reimbursed $2,000 by his employer under an accountable plan. Steven's AGI for the year is $50,000, and while he itemizes deductions, he has no other miscellaneous itemized deductions. What is the amount and character of Steven's deduction after any limitations?

• A) $500 from AGI
• B) $500 for AGI
• C) $2,000 from AGI
• D) $2,000 for AGI

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Definitions:

Lockbox System

A service offered by banks to companies for the collection of payments from customers, involving the customers sending their payments to a special post office box.

Net Present Value

A technique utilized in the process of capital budgeting to assess an investment's profitability by determining the difference between the present value of cash inflows and outflows.

Treasury Bills

Short-term government securities with maturation periods of one year or less, considered a safe and liquid investment option.

Opportunity Costs

The cost of missing out on the next best alternative when making a decision.