economics2

Facts: Taxpayers will be reimbursed by the corporation for all out of pocket expenses incurred including transportation, and lodging expenses. However, taxpayers will not be reimbursed for costs incurred in the operation and maintenance of employee home offices. Issues: 1. What procedures must the corporation take in developing and carrying out any type of accountable plan? 2. What should employees be aware of regarding tax treatment of reimbursements and unreimbursed employee expenses? References: Sec. 62(a)(2) Employee expenses …

…as well, for the employees with home offices would, in effect, get deductions for agi rather than itemized deductions, and the corporation could deduct those reimbursements if adequate substantiation was present. However, as it stands now, the shareholders do not report any reimbursements nor any expenses relating to all allowable employee expenses except those dealing with home offices. All home office expenses may be deducted as miscellaneous itemized deductions subject to the 2% of agi limitation.