Question

A professional client for whom you have acted for many years has provided documents and claims for an overseas trip that was taken to attend a conference. You have prepared the tax return on the basis of that information.

When the client comes in to sign the tax return they talk about the overseas trip and show you photographs of the family holidaying around Europe after the conference.

What do you need to do? 100–120 words

What would you do to resolve this situation? 100–120 words

         

Answer 1

As per the IRS if the trip is within U.S the prima facie objective of the trip should be business oriented. If incidental personal travel is done like holidaying post conference the expense related to them will be non deductible. If the trip is outside US time must be allocated between business and personal activities. We need to first classify the quantum of business hours and vacation hours and then claim the deduction accordingly.

In the given case we need to ask the client about the bifurcation of expenses incurred on the trip. Since the holidaying was done only after the conference the main object is believed to be business oriented. Therefore as per the IRS if the trip is within US only Business Related Expenses can be claimed and if the trip is outside US the expense need to be apportioned on the basis of business hours and vacation hours.