Jerry Recently Graduates with an MBA Degree from a Leading

question 89

Essay

Jerry recently graduates with an MBA degree from a leading university and will be going to work as an employee of a major stock brokerage firm. Jerry is unsure of the circumstances under which he can legitimately deduct the costs of entertaining and dining with clients and prospective clients. Jerry will spend approximately $5,000 a year on such activities for which he will not be reimbursed. It is important that he be able to derive tax benefit for these costs. Advise Jerry of the general rules in this area of the tax law. Include a brief discussion of substantiation requirements for such business expenses.

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Definitions:

Market Basket

A selected set of goods and services used to track the price level or cost of living over time.

Poverty Measure

A quantitative method used to determine the economic threshold that defines poverty, based on income, consumption, or other social indicators.

Cultural Capital

Non-material assets such as education, intellect, style of speech, and appearance that enable social mobility and prestige.

Developmental Capital

Resources, both tangible and intangible, that support the growth and development of individuals, communities, or nations.