Michael,a U

question 14

Essay

Michael,a U.S.citizen,earned $100,000 of foreign-earned income and no other U.S.or foreign income in 2013.He also incurred $10,000 of employment-related expenses,none of which were reimbursed.If the full foreign-earned income exclusion is utilized,calculate the deductible employment-related expense (before the 2% nondeductible floor).

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Definitions:

Consumption

The use of goods and services by households or individuals, typically measured in economic studies to assess economic activity or well-being.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford with a given budget at prevailing prices.

Income

Money received, especially on a regular basis, from work, property, or investments.

Utility Function

A mathematical representation of a consumer's preference ordering over a set of goods or outcomes.