Have a Tax Question? Ask a Tax Expert
Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!
Unfortunately, the IRS is aware of this kind of arrangement. In order to be deductible, the trip has to be ordinary and necessary for your rental property. The major reason for the trip has to be for business-related reasons. If you went to NY and talked to Realtors, and actually made an offer or wrote a contract on some rental property, then you would have a better basis for the deduction. If you just go and do a general "check out" of the real estate environment in NY, the trip would not be deductible. If you went and spent one of the three days truly investigating rental properties (you would have to document the properties that you looked at, what real estate agent showed them, etc.) you could deduct a proportional amount, or 1/3 of the expenses for a three day trip.
As a CPA, I used to travel, and always looked for local CPAs, looked in phone books, etc., but never wrote the trip off for just that reason. Similarly, I have family and clients in Wisconsin, if I took a trip up there and saw a client, I would only deduct a proportional amount of expense. If I spent 1/2 of a day working and visiting clients of a 2 day trip, I would deduct 1/4 of the expense.
I hope this has answered your question! If you have any more, please feel free to ask! If my answer has helped you, please rate me highly! I would appreciate that!
Again, thanks! Have a great weekend!
What would qualify for the entertainment cost? when can I deduct ticket to an event, a meal and so on?
You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests.
To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that:
The main purpose of the combined business and entertainment was the active conduct of business,
You did engage in business with the person during the entertainment period, and
You had more than a general expectation of getting income or some other specific business benefit at some future time.
Even if your expenses do not meet the directly-related test, they may meet the associated test. To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is:
Associated with the active conduct of your trade or business, and
Directly before or after a substantial business discussion