By Mark E. Battersby

Imagine an enjoyable — and educational — vacation with Uncle Sam, in the form of our tax laws, picking up part of the tab. That's right, every chiropractic practice, the principles in that practice and even chiropractors who are employees of their own practice as well as those who are employees of another business or practice can legitimately claim an income tax deduction for the expenses paid or incurred in attending trade shows, conventions, seminars and meetings.

The principal downside to the convention expense deduction is that it does not apply to the expenses of attending a convention or meeting in connection with investments, financial planning or other income-producing property. This type of seminar or meeting rarely results in a tax deduction.

Ordinarily, all that is required to qualify for convention-related tax deductions is that you be able to show, if asked, that attending the trade show, meeting, convention or other event benefited your practice.

In essence, the government, through the Internal Revenue Service, is willing to pickup the tab for a sizable portion of the expenses of your attendance at a trade show or convention — if you follow the rules. The expenses of exhibiting or participating in a show or event are also deductible as legitimate sales expenses.

DEDUCTING THE ESSENTIALS

The expenses incurred while traveling to the site of that convention, trade show or event are, as mentioned, tax deductible. Tax deductible travel expenses include such things as the cost of traveling by plane, train, bus or car between your home and the site of the meeting, convention or trade show.

Also included are the expenses of taxi cabs, commuter bus and airport limousines, baggage and shipping costs for samples or display materials, lodging and meals, cleaning, telephone and even tips. And, don't forget the costs associated with attending the convention itself.

How, and at what expense, you get to that convention site, the cost of lodging and meals are legitimate deductions, if you are away from home overnight. When it comes to meals, the tax rules contain quite a few restrictions — and a number of loopholes.

Generally, expenses for meals include all amounts spent for food, beverages, taxes and related tips. The tax deduction for meals, however, is limited to 50 percent of the amount actually spent.

Under the tax rules, an attendee can use either the actual cost of the meals or a standard amount in order to figure out the convention-related meals expense. If you, as an individual, are reimbursed for those expenses, how you apply the 50 percent limit depends on whether your employer's reimbursement plan was accountable or nonaccountable.

BRINGING COMPANY

If your spouse, family member or other person accompanies you to a convention, neither you nor the practice cant usually deduct their travel expenses. The travel expenses for any accompanying individual are deductible only if that individual:

• Is your employee;

• Has a bona fide business purpose for the trip; and

• Would otherwise be allowed to deduct the convention expenses.

In order for a bona fide business purpose to exist, you must prove a real business purpose for the individual's presence. Incidental services, such as typing notes or assisting in entertaining, are not sufficient to qualify as a bona fide purpose.

STANDARD ALLOWANCES

As an alternative to deducting actual costs, both chiropractors and employees are permitted to deduct a standard amount for their daily meals and incidental expenses while attending a convention. The alternative deduction allows the attendee to deduct a set amount, depending on the destination and time period the travel takes place.

Naturally, even when this standard meal allowance is used, you need to keep records to prove the time, place and business purpose of any travel or convention attendance. Unfortunately, if your employer is related or is an incorporated chiropractic practice in which you are more than a 10 percent owner, you are unable to use the standard meal allowance.

The standard meal allowance is the official Federal Meals and Incidental Expense (M&IE) rate. During 2003 and thus far in 2004, the standard meal allowance has varied between $35 and $45 per day for most areas of the United States. Maximum per-diem rate, including lodging, has varied between $125 and $204 per day in 2003.

SELLING YOUR BUSINESS OR YOUR WARES

Almost every chiropractor can attend a trade show or convention and claim the expenses as an income tax deduction. Similar tax deductions are available when you have a promotional or sales booth at a show. In other words, the expenses of exhibiting or selling at a trade show or other event are also tax-deductible business expenses.

Under our income tax laws, it is immaterial whether the booth you set up at a show or other event is for the purposes of promoting your practice or your services or for the purpose of selling your goods, products or services.

Remember, however, expenses incurred in creating a unique display or booth may not qualify for an immediate income tax deduction. Depreciation may be appropriate.

FURTHER CONVENTION ENJOYMENT

The tax rules clearly state that all travel expenses are tax deductible if the trip to the convention or trade show was entirely business related. But, what if you decide to combine that meeting or trade show attendance with a vacation?

If the trip was "primarily" for business and, while at the convention or trade show, you extended your stay for a vacation, made a non-business-related side trip or had other non-business activities, you can still deduct your business-related travel expenses. Those expenses include the travel costs of getting to and from the convention destination and any business-related expenses at that destination.

If the trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a nondeductible personal expense. Naturally, you can deduct any expenses you have while at your destination that are directly related to attendance at the trade show or convention.

One more thing: Although your business trip has to be for bona fide business purposes, the agenda of the convention does

not have to deal specifically with your chiropractic practice. It is enough that you can reasonably be expected to gain some business benefit from attending or exhibiting at that event.

Mark E. Battersby is a tax and financial advisor, freelance writer, lecturer and author with offices in suburban Philadelphia. He can be contacted at 610-789-2480.

Disclaimer: The author is not engaged in rendering tax, legal or accounting advice. Please consult your professional advisor about issues related to your practice.