Issue 3 - February 2003

Finance & Taxes by Mark Battersby
Attending a trade show? Make it a tax write off

Uncle Sam, in the form of our tax laws, is willing to pickup a portion of the expenses of every chiropractor attending a trade show, meeting or similar event.

All that is required to qualify for the meeting-related tax deduction is that you show, if asked, that attendance or exhibiting at the trade show, meeting, convention or other event benefited your practice. Unfortunately, expenses for a convention or meeting in connection with investments, financial planning or other income-producing property, are not tax deductible.

Despite that small stumbling block, imagine the possibilities! You can attend virtually any convention and claim the expenses as an income tax deduction.

The catch: You have to follow IRS rules.

Deducting the essentials
The IRS says that expenses incurred while traveling to the site of a convention, trade show or event are tax deductible. That includes the cost of traveling by plane, train, bus or car between your home and the site of the meeting, as well as the cost of taking cabs, buses and airport limousines; baggage and shipping costs for display materials; lodging and meals; cleaning; telephone; and even tips. For meals, you can deduct 50 percent of all amounts spent.

Expenses are deductible only if you stay away from home overnight or long enough to stop for sleep in order to perform your duties.

Under the tax rules, you have a choice: You can either deduct the actual cost of the meals or use a standard deduction. 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 another person accompanies you to a convention, neither that person nor the chiropractic practice is permitted to deduct that person’s travel expenses unless that individual is you employee, has a bona fide business purpose for the trip and would otherwise be allowed to deduct convention expenses.

Note: The IRS does not consider typing notes or assisting with entertaining as bona fide business purposes.

You can use a standard deduction instead of keeping track of expenses. But you must still keep records to prove you had legitimate business travel or convention attendance. You should note, however, that if you are related to the employer (chiropractor) or own more than 10 percent of an incorporated practice, the IRS does not allow you to use the standard meal allowance.

How much is that standard allowance? It depends on where you travel. The IRS has a schedule of allowances. During 2002 and thus far in 2003, the standard meal allowance varied between $34 and $42 per day for most areas of the United States. Maximum per-diem rate, including lodging, varied between $125 and $204 per day in 2002.

What if you piggy-back a vacation onto a trade show?
If the trip is “primarily” for business, you can still deduct your business-related travel expenses. If, however, the trip is primarily for personal reasons, (such as a vacation), the entire cost of the trip is a nondeductible personal expense. You can, however, deduct any expenses related to attendance at the trade show or convention.

In order to claim any tax deductions, you must be able to prove that the expenses were, in fact, paid or incurred. Be careful: The IRS eyes expenses for travel, entertainment and business gifts carefully, since these have traditionally been abused. If you incur these expenses, make sure you keep adequate records or sufficient evidence corroborating the expense.

Mark E. Battersby is a tax and financial advisor. He writes this column for educational purposes, not to give specific advice.