Brees CoRequires Its Employees to Adequately Account for All Reimbursed Business

question 127

Multiple Choice

Brees Co.requires its employees to adequately account for all reimbursed business expenses.Tracy,an employee of Brees Co.has AGI of $50,000 and submitted for reimbursement the following valid business expenses: ​
What are the tax consequences if Brees reimburses Tracy $2,400?
I.Tracy must report $2,400 of income.
II.Tracy can deduct $2,400 of the expenses for AGI and $-0- as miscellaneous itemized deductions,after limitations.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Atmosphere

The layer of gases surrounding Earth or another planet, vital for life as it provides oxygen, absorbs ultraviolet solar radiation, and traps heat.

Forests

Large areas dominated by trees and undergrowth, providing habitat for biodiversity and playing critical roles in the Earth's ecosystem.

Seed-tree Cutting

A forestry technique that involves leaving a few seed-producing trees standing to regenerate the forest.

Harvested

The process of gathering mature crops from the fields or collecting the elements of a natural resource for human use.