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Dedudibility of Employment-related Expenses

Mike incurs the following employment-related expenses in the current year:
Actual automobile expenses $ 2,500
Moving expenses (deductible under Sec. 217) 4,000
Entertainment expenses 1,500
Travel expenses (including $500 of business meals) 2,500
Professional dues and subscriptions 500
Total $11,000

Mike's AGI is $120,000 before any of the above expenses are deducted. None of the expenses listed above are reimbursed by Mike's employer. He has no other miscellaneous itemized deductions and does not use the standard deduction.

a. What is the amount of Mike's deduction for employment-related expenses?
b. How are these items reported in Mike's tax return?

Solution Preview

a. What is the amount of Mike's deduction for employment-related expenses?

IRC section 62(a)(15) states that "For purposes of this subtitle, the term "adjusted gross income" means, in the case of an individual, gross income minus the following deductions ... The deduction allowed by section 217." IRC section 217(a) states that "There shall be allowed as a deduction moving expenses paid or incurred during the taxable year in connection with the commencement of work by the taxpayer as an employee or as a self-employed individual at a new principal place of work."

IRC section 162(a)(2) states that "There shall be allowed as a deduction all the ordinary and necessary ...

Solution Summary

Citing specific sections of the Internal Revenue Code, this solution discusses in detail the deductibility of certain employment-related costs.

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