October '21

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70 THE SHOP OCTOBER 2021 SPECIAL REPORT: TRADE SHOWS conference agendas with business-oriented sessions, a list of exhibitors that serve your organization, a catalog of relevant seminars (mark the ones you attended) and business cards and vendor brochures. WHAT TO DEDUCT So, what are some deductible expenses? Actual transportation costs are the most obvious. They can include travel by airplane, train, bus or automobile. Taxi or hired car travel during the trade show visit is also deductible. So are baggage costs, tips and what the IRS calls "ordinary and necessary expenses related to your business travel." The Internal Revenue Service provides extensive guidance on the deduction of expenses in its publication Travel, Gift and Car Expenses. Visit and search 463. For a complete list of deductible items in that publication, see Table 1-1 on page 5. Additional information is available in another IRS document titled Business Travel Expenses. Search the same site for 511. In an attempt to assist the restaurant industry, the COVID-19-related Consoli- dated Appropriations Act, signed into law in December 2020, made an important change to the deductibility of eligible meals during business travel. For tax years 2021 and 2022, such meals are 100% deductible. (Previously the deduction was 50%). Note that meal costs are not deductible at all if the trade show is close to home. The IRS puts it this way in its publication Travel, Gift and Car Expenses: "You can deduct the cost of meals if it is necessary for you to stop for substantial sleep or rest to properly perform your duties while trav- eling away from home on business." If your travel requires an overnight stay, then meals are eligible for deduction. On a related matter, the 2017 Tax Cuts and Jobs Act (TCJA) eliminated the deduct- ibility of entertainment—an expense com- monly encountered by businesspeople attending trade shows. "Loss of the entertainment deduction has hit many businesses pretty hard," says Flemming. "Some are rethinking how they court clients." How about you? Should you still enter- tain customers even though you cannot deduct the bill? "You need to look at your return on investment," says Flemming. "Does the expense result in more business because it encourages customers to return?" If your paperwork does not support your deductions, they can be taken away. Taking the time to document your activity when you travel to a show can help alleviate the costly impact travel and hotel expenses can have on your bottom line. Trade Show Tax Deductions

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