Business vs Coach Airfare

[Deleted]

Hi All,

My husband wants to make a trip to the US. We have a legitimate business need; e.g. it looks like we have to replace the fireplace insert (it's a supplemental heat source) in our cabin which is in vacation rental service.

He has not visited the property this calendar year. Can we write off the cost of business class fare or must we use coach class fare cost?

Thanks for your help!

[mwcpa]

from IRS.gov

"Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced recordkeeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses."

www.irs.gov/pub/irs-pdf/p463.pdf (travel)
www.irs.gov/pub/irs-pdf/p552.pdf (recordkeeping requirements)

vacation homes (that are rented) have special rules that limit the amount of any allowable loss....see
www.irs.gov/taxtopics/tc415.html
www.irs.gov/publications/p527/index.html
IRC 280A(g) Special Rule for Certain Rental Use


there is always an issue as to whether travel costs above coach level are lavish or excessive... remember the law only allows for expenses that are ordinary and neccessary.... that are not lavish or excessive in the circumstance....

also, if travel is incurred when their is a personal and business nature involved the "intent" of the trip (or primary purpose) comes into play.... example.... I live in NY.... I am going to LA for a weekend to attend a family wedding.... when I arrive on Friday I arrange a quick meeting with a client.... chances are the trip to LA is not going to be a tax deduction..... now, change the facts a bit.... I am going to LA for a weekend to attend a family wedding.... I decide to stay for the week and during that week I have numerous meetings with client, prospects (working 8+ hours a day M-F).... the airfare will probably pass muster here....(but the hotel on Friday and Saturday, would not... Sunday night to Thursday night would be okay, assuming I fly back Friday)

also, watch out for IRC 162(a)(2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business

and you have passive loss rules to possibly address

[Deleted]

Hi MWCPA,

As always I can count on a prompt answer from you! Thanks for the quotes and links. Fortunately he wound up booking in what is called extended economy so not as expensive as business. The back story is that I wasn't a happy camper about how much money he was going to spend on the ticket ($2500!) and I was hoping that the IRS would require coach travel . He does have a note from his doctor to his employer recommending business class because he had an episode of thrombosis about 10 years ago. The leg from London to LA will probably be 9 or 10 hours so I think extended economy is reasonable. As you may remember we do have the passive loss limitations so yeah, this gets rolled into the giant "carry forward" we've been accumulating.

He has no agenda-he just wanted to get an American culture fix so being the wonderful wife that I am (lol) I'm putting him to work. We really need to get that insert replaced or we severely limit our ability to rent the place in the winter. I've tried to get a handyman to research our issue but it hasn't worked out. We need to do the homework and make a decision.

And yes, I'm aware of the limitations on personal use of the vacation rental. We've always lived a minimum of 6 hours away so it's never been an issue. I keep a record of what tasks we perform when we stay. Ironically, this year will be the first year ever that we'll come close to the 14 day maximum. Although I stayed there a month, 3 weeks of that was serious work, e.g. fire abatement, deep cleaning, painting and repairs. We joke we've always taken better care of that house than the one we live in. Those holiday renters have higher standards!

As always, thanks so much for your help!

[taxref]

This trip may well be over and done now, as I'm answering quite late. I would advise, however, careful documentation of the rental activity done on the trip.

As discussed above, the IRS does not really care about coach vs. business seating, or whether someone flies when it could be cheaper to use a different mode of transportation. However, to be even partly deductible a trip must be primarily for business. If a trip is less than half business, very little can be deducted.

I know if I were an auditor, my curiosity would be raised at a trip from Europe to change out a fireplace insert. I would detail things in writing now and keep it with your tax records. If the trip is questioned, you will then be able to produce documentation that the trip was primarily business.

[Deleted]

Hi Tax Ref,

Trip is 18 Sept. Now we've got a major sewer repair + we had to repair our irrigation system (Total $4500) for a another house we also own in So. Cal. Add in the fireplace insert and I think we have enough to support a trip. We're dropping some serious coin this year.