Contents:

TABLE OF CONTENTS: INTRODUCTION: MAKING YOUR T&E DEDUCTIONS STICK SECTION I: WHAT’S DEDUCTIBLE OR NOT TRAVEL EXPENSES - Travel expenses in pursuit of a trade or business - Travel expenses and income production - Investment seminars and conventions - Travel as a form of education - Expenses to seek new employment - New business location - Seeking foreign markets for existing products MEALS AND LODGING WHILE TRAVELING - Defining ‘home’ for travel purposes - Two places of business - Salesperson’s ‘tax home’ - Temporary assignments - Indefinite assignments - Requirement of overnight travel - Domestic travel for business and pleasure - Saturday night stay-over rule - Travel expenses for spouse or other family members - Foreign business trips - Foreign combined business/pleasure trips - Limits on luxury water travel - Train travel versus air travel - Cost of local travel - Commuting expenses COST OF OPERATING AND MAINTAINING BUSINESS VEHICLES - Personal and business use of a car - Standard mileage rates - Use of standard mileage rates - Standard rate for alternating use of two cars - Mileage and reimbursements - Deductible nonbusiness car expenses - Cost of traffic violations - Bigger deductions for ‘heavy’ SUVs - Even better: Buying a heavy non-SUV ENTERTAINMENT - Ordinary versus lavish entertainment expenses - Entertaining at home - The 50 percent rule - Who can be entertained? - Entertainment directly related to trade or business - Entertainment in a clear business setting - Entertainment associated with a trade or business - Defining a business discussion - Goodwill entertaining YACHTS, VACATION RESORTS AND OTHER SPECIAL CIRCUMSTANCES - Deductions for sky boxes - Reduced deductions for personal use of company aircraft - Meals while on travel status - Business program lunches or dinners - Company-provided meals - Employee activities - Director, stockholder or employee meetings - Trade association meetings - Expenses for spouses - Reciprocal entertaining BUSINESS GIFTS AS DEDUCTIBLE EXPENSES - When the $25 limit doesn’t apply CLAIMING AND PROVING T&E DEDUCTIONS - Expense allowances and reimbursements - T&E checklist - Benefits of adequate accounting - Logging expenditures - Adequate accounting for mileage allowance - Adequate per diem accounting - Allowances for related employees - Employer controls for adequate accounting - Ensuring unreimbursed outlay is necessary - Closely held corporations SECTION II: BACKUP RECORDS TO SUPPORT YOUR DEDUCTIONS SUBSTANTIATION RULES FOR T&E AND LISTED PROPERTY - Proving travel expenses - Proving entertainment expenses - Proving business gift expenses - Keeping a diary, account book or other record - Timely records - When documentary evidence is required - Confidential information - Entertaining large and small groups - Employer’s records and supporting documents - Form of records - Establishing amount of expenditure - Retention of records and receipts - Factors you must prove to substantiate expenditures - Recordkeeping rules for local transportation expenses DISALLOWANCE OF DEDUCTIONS - How disallowed T&E expenses cause trouble - Civil and criminal tax penalties CONCLUSION