Matt Is a Sales Representative for a Local Company

question 97

Multiple Choice

Matt is a sales representative for a local company.He entertains customers as part of his job.During the current year he spends $3,000 on business entertainment.The company provides him an expense allowance of $2,000 under a nonaccountable plan.How will Matt treat the $2,000 partial reimbursement and the $3,000 entertainment expense?

• A)He will deduct the $1,000 net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor.
• B)He will deduct $500 of the net expense as a miscellaneous itemized deduction,subject to the 2% of AGI floor.
• C)He will recognize $2,000 of income and deduct $3,000 as a miscellaneous itemized deduction,subject to the 2% of AGI floor.
• D)He will recognize $2,000 of income and deduct $1,500 as a miscellaneous itemized deduction,subject to the 2% of AGI floor.

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Definitions:

Colour Vision

The ability of the visual system to distinguish and perceive different wavelengths of light as distinct colors.

Proximal Stimulus

The physical energy from a stimulus that directly interacts with sensory receptors, such as light hitting the retina.

Information Processing

A cognitive approach that emphasizes the ways in which people encode, store, and retrieve information.

Vision

The sense that allows the perception of light, shapes, and colors, facilitating the ability to navigate the environment.