From: C&L Value Advisors LLC []

Sent: Tuesday, June 14, 2011 2:41 PM

To: Heidi E. Wisneski

Subject: Mixing Business with Pleasure/Maximizing Travel Deductions


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How to deduct travel expenses when mixing business with pleasure.



Getting to the Airport

All business expenses incurred with getting to your flight are deductible.



Planes and Trains

Airfare, train tickets, tips and fees are deductible.



Make it a Long Weekend

If it's cheaper to stay through a Saturday - maximize your trip and deduct the expenses.




Tax Records

Document everything and keep every receipt associated with travel expenses.





Here are some strategies for deducting travel expenses and subsidizing downtime while away on business.   





Deducting Domestic Transportation Expenses

Getting to and from your business activity is 100% deductible, as long as  "business" is the primary reason for traveling.  The deductible expenses include travel to and from your departure airport, the airfare, baggage fees and tips, and cabs to and from the destination.  Once at the destination, your out-of-pocket expenses for business days are fully deductible including lodging, hotel tips, meals (subject to the 50% disallowance rule).



Traveling during Weekends and Holidays

How do you determine if the primary reason for domestic travel is for business when you mix in a little pleasure?  The number of days spent on business versus pleasure is the key factor. 

The IRS does not specify how to determine the primary reason for domestic travel, but the rules on foreign travel offer guidance.  Your travel days will count as business days, as do weekends and holidays, if they fall between days devoted to business and it would be impractical to return home.  Example: Columbus Day, Martin Luther King Day, etc. Standby days, when your physical presence is required, also count as business days, even if you're not called upon to work those days. 



Document Everything

Be sure to accumulate proof about your travel itinerary and keep the proof with your tax records. Log everything on your daily planner and copy the pages for your tax file.  Keep all receipts dated and organized.  If you attend a convention or training seminar, keep the program and take some notes to show you attended the sessions. 



Saturday Night Stayover

A great way to maximize deductions for the personal portions of a trip is with a Saturday night stayover. If you can show staying the extra day or two costs less (or no more) than coming back home immediately after a business meeting, the IRS allows you to deduct your additional meal and lodging expenses (subject to the 50% disallowance rule for meals).


Conventions on Cruise Ships

Deductions related to conventions directly related to your trade that are held aboard cruise ships are limited to $2,000 per individual per calendar year.  The ship must be

a US registered vessel, and all its ports-of-call must be in the US or its possessions.  


If you plan on deducting the expenses of a cruise, the IRS requires the following:


1.  A signed statement showing the total days of the trip spent aboard the ship, the number of hours each day spent attending scheduled business activities, and the program of the convention's scheduled business activities.


2.  A statement signed by an office of the sponsoring organization that includes a schedule of each day's business activities and the number of hours you attended those activities. 


Deducting Foreign Travel

When you travel outside the U.S. primarily for business reasons, the general rule is that you must allocate all your travel expenses, including transportation, between business and personal. However, there are two BIG exceptions, and you can often plan ahead to take advantage of them.  You can deduct 100% of your transportation expenses if the trip is primarily for business and you meet either of the following rules:


1.  The One Week Rule.  You'll meet this rule if your business trip is a week or less, not counting the day you leave, but counting the day you return.  In this case you can deduct 100% of your transportation costs and 100% of your other out-of-pocket expenses for business days (subject to the 50% disallowance rule for meals).  You cannot deduct out-of-pocket costs incurred on vacation days.  However, weekends and holidays falling between business days count as business days.


2.  The 25% Rule.  You can also deduct 100% of your transportation expenses for trips lasting over a week, as long as you spend less than 25% of your days on vacation.  For this purpose, count the day of departure and day of return as business days, as long as you are traveling to or from the business destination.  Also, count all other types of business days mentioned under the One Week Rule above. You cannot deduct meals, lodging and other expenses allocated to personal days.


In short, 100% of your transportation costs to foreign destinations are deductible as long as you can prove a personal vacation was not a consideration in choosing to make the trip. 


These tips are a brief recap of the deduction rules.  Feel free to contact your Client Service Manager with any questions regarding the deductions. We can be reached at [813-286-7373].




Kevin Cameron & Jolene Loos
C&L Value Advisors LLC


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