Problem:
Maxine incurs the following employment-related business expenses in the current year:
Professional dues and subscriptions $1,000
Airfare and lodging 2,000
Local transportation for employment-related business activities 1,000
Customer entertainment (business lunches where business is discussed) 1,000
Total = $5,000
After making an adequate accounting of the expenses, Maxine receives a reimbursement of $3,000 from her employer. Assume that Maxine's AGI is $60,000, she has other miscellaneous itemized deductions of $1,000 and she does not use the standard deduction.
Required:
Question 1: What amount of expenses is deductible by Maxine?
Question 2: Are each of these expenditures classified as for AGI or from AGI deductions?
Question 3: How would your answers to part a and b change if Maxine instead received a $6,000 reimbursement?
Note: Explain all steps comprehensively.