Question

Ben is the chief executive officer of a restaurant chain based in Maine. Ben began the business 15 years ago and it has grown into a multimillion-dollar company, franchising restaurants all over the country. Ben has a new interest, however, in horse breeding. He previously raised horses with some success over the years but has only recently decided to pursue this new business with the same intensity with which he originally pursued the restaurant business. Ben likes South Florida and sets up his new horse breeding business there. He purchased a fully operational breeding farm and leased a nearby condominium for six months so he can oversee the business. Ben plans to spend about six months each year in Florida for the next three years overseeing his horse business, which should provide about 30 percent of his total income. Ultimately, Ben wants to sell his interest in his restaurant business and retire to Florida to devote all of his time to his horses. Ben wants to know if he can deduct any of the costs associated with his travel to Florida.

Answer 1

In this case Ben is travelling away from home on business and so as per the existing rules and regulations he will be able to deduct his travel expenses between Maine and Florida. Moreover he will be able to deduct his Florida condominium lease expenses and the allowable portion of meal costs as well.

It should be noted that under section 262 living expenses are nondeductible personal expenses. However in Ben’s case these expenses will be eligible for deduction as travel expenses related to his business. As per provisions of section 162 (b) deductions for traveling expenses can be claimed. This includes expenses like costs of meals and lodging when the person is away from home for business purpose. Thus Ben will be allowed to deduct his travel expenses to and from Florida, his lease payments and the allowable portion of meal costs.

It should be noted that Ben’s travel expenses are reasonable and necessary, are incurred while away from home and are incurred in the pursuit of business. As such Ben can deduct his expenses.