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Please don't shoot the messenger here, but the basic idea is that the trip must be FOR a business reason.
You CAN deduct business travel costs WHILE ON a personal trip.
For example, if you are visiting family in another city and you make an appointment to see a client, your costs for that appointment are deductible business expenses, but you can't deduct any other travel costs since the trip was primarily personal.
The IRS considers these business activities as "incidental" to the main purpose of the trip, which is personal travel, stating, "The scheduling of incidental business activities during a trip, such as viewing videotapes or attending lectures dealing with general subjects, will not change what is really a vacation into a business trip."
Here's a great article on the subject
It will be easier to plan your business trips, and to combine business with vacation when possible, if you become familiar with the IRS's ground rules.
Expenses must be ordinary, necessary and reasonable. A travel expense is a type of business expense. Therefore, you must be able to meet the general business expense requirements in order to claim a deduction.
The primary purpose of a trip is determined by looking at the facts and circumstances of each case. An important factor is the amount of time you spent on personal activities during the trip as compared to the amount of time spent on activities directly relating to business
so had I booked a convention/seminar first, and then booked the cruise as means to get there, that would become deductible?
If the trip is primarily personal in nature, none of your traveling expenses are deductible. This is true even if you engage in some business activities while you are there. (However, you may be able to deduct particular expenses you incur while you're at your destination if they otherwise qualify as "business deductions)
It has top do with the purposes of the trip, not which booking came first
The IRS uses a doctrine called substance over form
They'll put it to what they call the "reaonable person" test (looking at it through the eyes of a person who reatched you while you were there
Here's a good article on what things qualify as business deductions ... it's on those items that you'll make the best case for being perceived by the reasonable person as "business expenses."
Here's the IRS guidance itself
From there ....
Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses using Form 2106 (PDF) or Form 2106-EZ (PDF) and on Form 1040, Schedule A (PDF). You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.
You can certainly get some mileage from this one:
Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel.
The deduction for business meals is generally limited to 50% of the unreimbursed cost.
Again, sorry to have to be the bad news messenger here (although there is SOME good news), but hopehully, having all the facts will help you "see around some corners."
Found another one:
Philip Panitz, a tax litigator at Panitz & Kossoff in Westlake Village, Calif., once had a physician try to deduct his wife's snorkeling expenses in Hawaii while he was at a medical seminar.
"In his eyes, that was worthy of a deduction, because if it wasn't for the business trip, she wouldn't be there snorkeling," he says.
Still with me?
BotXXXXX XXXXXne here? have WRITTEN evidence of costs at meals, meeting places, all those kinds of things that can't really be question as to whether they were business and use as many of those as possible
Note this part of that last article:
"The easiest and most efficient way is to write on the back of each slip the following: reason of the expense, name of the person you met, the location and date," says Paul Golden, spokesman for the National Endowment for Financial Education."
Each year, many people don't, yet still try to deduct as many of their business travel expenses as they can, tax experts say
I still don't see you coming back into the chat ... (I'll move us to the the "Question and Answer" mode) ... maybe that will help ... We can still continue a dialogue there, just not in real time as we can here
Let me know if I can help further
Again, I hope you'll rate my answer based on it's thoroughness and accuracy, rather than any good news/bad news content AND let me know if you want to drill down on this some more
Sorry, I logged in at a horrible time and had to return to seeing patients. If it's not too much to ask, can you point out what is incorrect in this reference then? http://bradfordtaxinstitute.com/Content/How-Safe-Harbor-Rules-Can-Audit-Proof-Your-Cruise-to-the-Caribbean.aspx From what I understood, the IRS treats your travel no differently on a cruise than it does if you were to fly. Meaning if you had a qualified business reason to go to St. Thomas then your travel costs to get there would be deductible the same wether you went by cruise (7 days or less) or by air? Please understand I am not trying to argue, just making sure I fully understand. The last thing I want to deal with is raised eyebrows from the IRS! Lol.
Another reference www.cpa-connecticut.com/cruise-tax-deduction.html
lol, sorry I'm trying to make it a clickable link for you http://www.cpa-connecticut.com/cruise-tax-deduction.html
Sorry, I logged in at a horrible time and had to return to seeing patients. If it's not too much to ask, can you point out what is incorrect in this reference then? http://bradfordtaxinstitute.com/Content/How-Safe-Harbor-Rules-Can-Audit-Proof-Your-Cruise-to-the-Caribbean.aspx From what I understood, the IRS treats your travel no differently on a cruise than it does if you were to fly. Meaning if you had a qualified business reason to go to St. Thomas then your travel costs to get there would be deductible the same wether you went by cruise (7 days or less) or by air? Please understand I am not trying to argue, just making sure I fully understand. The last thing I want to deal with is raised eyebrows from the IRS! Lol. Another reference: http://www.cpa-connecticut.com/cruise-tax-deduction.html
Hope this helps
Very informative, thank you. It seems that there are ways to do it, but I don't know if I want the hassel! I did however find a medical related one day seminar at one of my destinations, basically for continuing education, should be easy enough to document.
That is funny that you say that, because I actually came across an interesting opportunity to purchase part of a practice there yesterday. What type of documentation would I need to show that I actually went there for that purpose, should I choose to investigate that further? I know you have gone above and beyond for me, and promise an extremely positive review today!!
Yes, section 2031 of the Jobs Act now allows small business owners to take an immediate $10,000 deduction against qualifying start-up costs by filing for a 195 deduction on IRS Form 1120, 1120S, or 1065 or as an “Other Expense” on the Schedules C or F of the 1040 form.
Section 2031 of the Jobs Act allows a deduction for any qualified start-up expenses up to $10,000 but requires a dollar for dollar reduction if the expenses exceed $60,000. Typically, what qualifies as a start-up expense includes any costs related to the business prior to opening. These can include:
Here's the actual tax code with citation for your accountant:
§ 195. Start-up expenditures
(a) Capitalization of expenditures.--Except as otherwise provided in this section, no deduction shall be allowed for start-up expenditures.
(b) Election to deduct.--
(1) Allowance of deduction.--If a taxpayer elects the application of this subsection with respect to any start-up expenditures--
(A) the taxpayer shall be allowed a deduction for the taxable year in which the active trade or business begins in an amount equal to the lesser of--
(i) the amount of start-up expenditures with respect to the active trade or business, or
(ii) $5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000, and
(B) the remainder of such start-up expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the active trade or business begins.
(2) Dispositions before close of amortization period.--In any case in which a trade or business is completely disposed of by the taxpayer before the end of the period to which paragraph (1) applies, any deferred expenses attributable to such trade or business which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.(
3) Special rule for taxable years beginning in 2010.--In the case of a taxable year beginning in 2010, paragraph (1)(A)(ii) shall be applied--
(A) by substituting “$10,000” for “$5,000”, and
(B) by substituting “$60,000” for “$50,000”.
(c) Definitions.--For purposes of this section--
(1) Start-up expenditures.--The term “start-up expenditure” means any amount--
(A) paid or incurred in connection with--
(i) investigating the creation or acquisition of an active trade or business, or
(ii) creating an active trade or business, or
(iii) any activity engaged in for profit and for the production of income before the day on which the active trade or business begins, in anticipation of such activity becoming an active trade or business, and(
B) which, if paid or incurred in connection with the operation of an existing active trade or business (in the same field as the trade or business referred to in subparagraph (A)), would be allowable as a deduction for the taxable year in which paid or incurred.The term “start-up expenditure” does not include any amount with respect to which a deduction is allowable under section 163(a), 164, or 174.
(2) Beginning of trade or business.--
(A) In general.--Except as provided in subparagraph (B), the determination of when an active trade or business begins shall be made in accordance with such regulations as the Secretary may prescribe.
(B) Acquired trade or business.--An acquired active trade or business shall be treated as beginning when the taxpayer acquires it.
(1) Time for making election.--An election under subsection (b) shall be made not later than the time prescribed by law for filing the return for the taxable year in which the trade or business begins (including extensions thereof).
(2) Scope of election.--The period selected under subsection (b) shall be adhered to in computing taxable income for the taxable year for which the election is made and all subsequent taxable years.
26 U.S.C.A. § 195 (West)