- Myrtle is a real estate developer who lives on Maui. Myrtle is a single Mom with her 19-year-old daughter Amanda. Myrtle went on a business trip to Vietnam to negotiate on partnering to building an office tower there. She was on business there for 7 days and spent 3 days (the intervening weekend and following Monday holiday) to sight-see. Myrtle brought her daughter Amanda on the trip. Amanda created a power-point presentation to assist Myrtle with potential investors. Myrtle paid for two first-class tickets, costing $4,000 each. The four-star hotel was $200 per night. Myrtle could have saved money because an economy class ticket would cost $1,000 and a two-star hotel would cost $100 per night.
- Summarize the relevant Code and Regs. in two paragraphs.
- Homework Preview:
- part A: Write 2 travel issues, each from a different code section.
- part B: Discuss and Apply the Code and Regs in two paragraphs.
- Eliminates all passive voice (No “be” or “been”).
Uses only 3d person (No 1st or 2nd person in the memo).
*Additional Sources
| Example) Part A: Section 162(a)(2) Deduction of travel expenses based on the reason of travel depending if it is for trade or business purposes. Under Sec 162(a)(2) traveling expenses incurred during the taxable year on any trade or business are deductible, including amounts for meals and lodging other than amounts that are lavish or extravagant under the circumstances. Section 274(m)(3)(B)? Limiting factor of not deducting travel expenses of spouse, dependent, or other unless it was for bona fide business purposes. Part B: Myrtle took a business trip and under Section 162(a)(2) the expenses are deductible. The deduction does have a limitation. Some of Myrtle’s expenses are lavish and the amount she can deduct does not include the cost above a prudent expense. Under Section 274(m)(3)(B) does not allow Myrtle to deduct the travel expenses of Amanda. Although Amanda provided a powerpoint, she could have provided the same powerpoint from home. Thus Amanda does not have a bona fide business purpose during the trip. |
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