Michael graduates from New York University and on February 1st of the current year, accepts a position with a public accounting firm in Chicago. Michael is a resident of New York. In March, Michael travels to Chicago to locate a house and starts to work in June. He incurs the following expenses, none of which are reimbursed by the public accounting firm.
| Item | Amount | |||||
| Automobile expense en route (1,000 miles at 16.5 cents per mile – standard mileage rate) | ||||||
| $ 165 | ||||||
| Cost of meals en route | 100 | |||||
| Househunting trip travel expenses | 1,400 | |||||
| Moving van expenses | 3,970 | |||||
| Commission on the sale of Michael’s New York condominium | ||||||
| 3,500 | ||||||
| Points paid to acquire a mortgage on Michael’s new residence in Chicago | ||||||
| 1,000 | ||||||
| Temporary living expenses for on week in Chicago (hotel and $100 in meals) | ||||||
| 400 | ||||||
| Expenses incurred in decorating the new residence | 500 | |||||
| Total expenses | $ 11,035 | |||||
| Required: | ||||||
| a. What is Michael’s moving expense deduction? | ||||||
| b. How are the deductible expenses classified on Michael’s tax return? | ||||||
| c. How would your answer to Part a change if all of Michael’s expenses were reimbursed by his employer and he received a check for $11,035 | ||||||
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