Travel, Entertainment, and Auto Rules from a Tax Perspective - v14 (Course Id 2387)

Taxes - Taxes for Course Id 2387

Updating practitioners on current developments, this core program examines and explains the practical aspects of travel and entertainment deductions. Fundamentals are reviewed and planning opportunities are identified. Creative strategies are discussed and evaluated along with traditional approaches. Taxpayers are once again looking to their tax professionals for guidance and planning related to travel and entertainment expenses. The goal of this course is to understand and solve problems. Participants will learn to master the proper administration of these complex and often cumbersome provisions in a humorous and entertaining format. 

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 2387

As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.

       At the start of Chapter 1, participants should identify the following topics for study:

* Job hunting travel
* Travel expenses of investors
* Transportation expenses
* Business purpose requirement
* Circuit Court test for “tax home”
* IRS test for “tax home”
* No tax home
* Two work locations
* Away from home requirement
* Temporary & indefinite assignments

1. Recognize the importance of travel expenses and determine the difference between transportation and business travel under §162 by identifying types of business travel expenses and requirements of §162, §165, and §195.
2. Specify deductible travel costs to find a new job, identify investor travel expenses, and determine deductible transportation.
3. Identify the business purpose requirement, the complications of mixed business and personal travel, and costs at a destination.
4. Recognize the IRS’s and Circuit Courts’ definition of “tax home,” identify when a taxpayer lacks a tax home, and specify the “away from home” requirement including the sleep and rest rule.
5. Identify temporary and indefinite job assignments recognizing the critical factor in distinguishing the two job assignments.

       At the start of Chapter 2, participants should identify the following topics for study:

* Domestic business travel primarily for business
* Point-to-point rules
* Extended stay or side trip rule
* Foreign business travel
* Conventions & meetings
* Conventions outside the North American area
* Cruise ship conventions
* Luxury water travel
* Spousal & companion travel expenses
* Aides to sick & handicapped individuals

1. Identify the elements of domestic business travel, the 51/49 test, and what costs are deductible.
2. Specify the “point-to-point” rule for different modes of transportation and which expenses incurred on a business trip with an extended stay or side trip are deductible.
3. Identify the rules for foreign business travel by:
a. Recognizing when foreign travel is fully deductible or disallowed, specifying the foreign travel allocation rule, and determining total allowable foreign travel expenses; and
b. Determining the allocation of expenses incurred in traveling on a foreign side trip and specifying exceptions to the general rule.
4. Recognize the deduction of convention and meeting expenses based on Reg. §1.162 by:
a. Specifying factors under the agenda test and how the application of this test determines if a meeting is predominantly business related;
b. Identifying the availability of the convention and meeting deduction to professional groups, self-employed persons, employees, and the videotaped lecture rule; and
c. Determining the differences between foreign conventions and foreign travel and citing convention expenses permitted under §274(h)
5. Determine the rules and limitations on non-north American and cruise ship conventions.
6. Specify the luxury water travel exception, recognize the companion travel expense limitations, and identify whether expenses for aides to handicapped taxpayers accompanying the taxpayers on business trips are deductible travel expenses.

       At the start of Chapter 3, participants should identify the following topics for study:

* Parking fees
* Trips to a union hall
* Commuting & economic hardship
* Irregular worksite assignments
* Home office
* Hauling tools & equipment
* Transportation between different sites
* Transportation between different jobs

1. Determine what constitutes transportation, local transportation, and commuting, recognize when parking fees are deductible, and specify the effect of the Washburn case on commuting deductions.
2. Identify the regular/irregular rule, determine a temporary work site under R.R. 90-23, recognize the impact of R.R. 94-47 and R.R. 99-7 on transportation between a taxpayer’s residence and workplace, specify the §280A home office requirements and their impact on business transportation, and identify the hauling tool rule.

       At the start of Chapter 4, participants should identify the following topics for study:

* Apportionment of personal & business use
* Deduction limitations using the actual cost method
* Expensing - §179
* Predominate business use rule
* Auto leasing
* Standard mileage method
* Auto trade-in vs. sale
* Employer-provided automobile
* Nonpersonal use vehicle
* Reporting of an employer-provided automobile

1. Recognize the apportionment of business and personal use of an automobile by:
a. Citing accepted methods of making an apportionment; and
b. Identifying the automobile costs that are generally deductible and nondeductible and their exceptions.
2. Determine actual cost method expenses, auto depreciation, and §179 expensing by:
a. Specifying a car for purposes of these provisions, identifying basis for figuring depreciation, and determining when a car is placed in service; and
b. Identifying depreciation methods and conventions under the modified cost recovery system (MACRS) and citing the depreciation caps that apply to different vehicles.
3. Recognize auto depreciation "caps" and post-recovery depreciation limits.
4. Determine the §179 expensing deduction’s relationship to depreciation, its limitations, and when to use it.
5. Specify the impact of the §280F predominate business use rule on depreciation, excess deductions, and the former investment tax credit.
6. Determine automobile leasing elements recognizing vehicle purchase differences, specify various leasing terminology including closed-end and open-end, identify monthly lease payments and income inclusion amounts, and cite the leasing deduction restrictions.
7. Identify the mechanics of the standard mileage method including the ability to switch methods, deduct charitable and medical transportation, and MACRS depreciation limitations.
8. Recognize the differences between trading and selling a vehicle and the use of employer-provided vehicles as §132 fringe benefits by:
a. Determining the value of an employee’s personal use of such an automobile under the valuation methods and the exclusion limits for related deductions; and b. Specifying nonpersonal use vehicles, what reporting standards apply, and identify the reporting requirements for employers.

       At the start of Chapter 5, participants should identify the following topics for study:

* Definition of entertainment
* Allocation – business & nonbusiness persons
* Former directly related test
* Former associated test
* Statutory exceptions
* Quiet business meals & drinks repeal
* Ticket purchases
* Percentage reduction for meals & pre-2018 entertainment
* Entertainment facilities
* Business gifts

1. Determine what constitutes entertainment and specify when deductible meals can be separated from nondeductible entertainment.
2. Recognize the general disallowance of entertainment and the several remaining statutory exceptions under §274(e).
3. Recall the 50% reduction for meals, determine what constitutes an entertainment facility specifying excluded facilities types and costs, and recognize club dues limitations.
4. Identify the tax benefits and substantiation requirements for business gifts, employee achievement awards, and sales incentive awards by specifying the business gift dollar limitation and the incidental cost gift exclusion and citing conditions that must be met for costs from a §74 qualified plan award program to be deductible.

       At the start of Chapter 6, participants should identify the following topics for study:

* Elements to be substantiated
* Separate expenses
* Adequate records method of substantiation
* Sufficiently corroborated statements method of substantiation
* Exceptional circumstances method of substantiation
* Written policy statements
* Treating vehicle as 100% personal
* Exempt vehicles
* Farming vehicles
* Additional information requirements

1. Identify expense categories subject to the detailed substantiation requirements of §274(d) and the exceptions to these requirements, and specify elements to be proven and which elements must be proven for the expense type.
2. Cite ways to substantiate travel and meal expenses using required records by:
a. Specifying when record entries must be made;
b. Selecting a sampling of the use of listed property for portions of a taxable year; and
c. Identifying documentary evidence.
3. Recognize the sufficiently corroborated statements method of substantiation including when this method can be used, and determine methods that can be used to substantiate the requisite elements of listed property expenditures and how long records should be retained.

       At the start of Chapter 7, participants should identify the following topics for study:

* Employees
* Accountable plans
* Adequate accounting
* Non-accountable plans
* Self-employed persons
* Meal & pre-2018 entertainment expenses for self-employed
* When an employer can deduct expenses
* Meals and employer-provided autos
* Disclosure of business use of automobiles
* Disclosure of business use of other listed property

1. Recognize the TCJA changes to unreimbursed employee expenses. Specify accountable plan requirements and differentiate the tax treatment of accountable and nonaccountable plan reimbursements.
2. Determine how to adequately account for travel and other employee business expenses by:
a. Specifying federal per diem rate methods to decide which per diem rate may be used;
b. Identifying incidental expenses for accounting purposes and specifying the meal break out and 50% limitation; and
c. Recognizing accountable and nonaccountable plan reporting of employee reimbursements.
3. Determine how to report income and expenses with or without adequate accounting, specify the tax treatment expenses incurred by an independent contractor, identify whether an employer can take deductions for reimbursed travel, meals, and/or business gifts, and determine how to make appropriate disclosures on tax returns of required information.

Employee Expense Statements

Required Documentary Evidence

Sufficiently Corroborated Statements - Method #2

Direct Evidence Requirement

Exceptional Circumstances

Destroyed Records

Special Substantiation for Listed Property – Method #3

Special Method #1: Written Policy Statements

No Personal Use Policy

No Personal Use Except for Commuting

Special Method #2: Treating Vehicle as 100% Personal

Special Method #3: Exempt Vehicles

Pickup Trucks & Vans

Special Method #4: Farming Vehicles - 75% Presumption

Additional Information Requirements

Retention of Records

Chapter 7 - Reporting & Reimbursement of T&E  Expenses

Reporting

Employee Expense Reimbursement

Unreimbursed Employee Expenses

Reimbursed Employee Expenses

Accountable Plans

Business Connection - Rule #1

Reasonable Period of Time - Rule #2

Fixed Date Safe Harbor

Period Statement Safe Harbor

Adequate Accounting - Rule #3

Per Diem Allowance Arrangements

Federal Per Diem Rate

Related Employer Restriction

Reporting Per Diem Allowances

Reimbursement Not More Than Federal Rate

Reimbursement More Than Federal Rate

Nonaccountable Plans

Self-Employed Reimbursement

Expenses Related to the Self-Employed's Business

Reimbursed Expenses Incurred on Behalf of a Client

With Adequate Accounting

Without Adequate Accounting

Employer Reporting

When Can an Expense Be Deducted?

Economic Performance Rule

Nondeductible Meals

Employer-Provided Auto

Disclosures Required on Tax Returns

Business Use of Automobiles

Business Use of Other Listed Property

Glossary