Tuesday, January 9, 2007

Travel and Entertainment Expense*

You may be able take a deduction for entertainment and meals if it is business-related and it meets all the requirements required under IRC §274(d). There must be a business relationship between the taxpayer and the persons entertained.
You can deduct a portion of your meals when traveling away from home overnight on business.
Deductions for meals and related taxes and tips are generally limited to 50% of the expense under IRC §274(n).
Instead of actual expenses for meals you can use $45 per day for low-cost localities and $ 58 for high-cost areas.
You can use a combined per diem rate for both meals and lodging of $ 148 for low-cost areas and $ 246 for high-cost areas.
You get no deduction if you go out partying by yourself or with non-business fellow partiers.
You get no meal deductions if you travel out of town on business and do not stay overnight or work on a local job (One job I had years ago gave me a meal allowance for all out-of-town work even if it was NOT overnight.) The tax rules were different in those days.
In addition to meals and entertainment, you can also deduct most other travel expensed such as lodging, air fare and taxis. You should get receipts for these other than when you take the per-diem allowance in lieu of actual expenses.
Expenses should be ‘ordinary and necessary’ and should not be lavish or primarily personal with only an incidental business-related purpose—for example a cruise on a luxury liner with a business meeting on the side.
More is available in IRS Publication 463 Travel and Entertainment

LINKS and Other IRS References and Resourceshttp://docs.google.com/View?docid=dch9s27g_13f4m7ph


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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.

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