What is the allowable voltage tolerance for a 120 volt cicuit per the NEC and what is the code reference?

Allowable? Anything.
Recommended? 3%.

Is this a test or homework? Let us know and we'll let you know where to look.

This is outside the NEC. Most devices are designed to function properly within a 10% +/- bandwidth. That is a product specification. So a 120 Vac device could work properly within a 132 volt A/C or a 108 volt circuit.

What Stan is referring to is the 5% end to end voltage drop of a cable run. Because this is a "FPN" (fine print note) in the 2008 NEC and an "IN" (Informational note) in the 2011 release of code it is a recommendation only. It is not code enforceable.

So, what exactly are you asking about?