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How Do I Deduct Foreign Business Travel with Sightseeing Included?

October 2015

Foreign travel expenses may be subject to allocation if the taxpayer engages in personal activities while traveling on business. A portion of the foreign travel expenses may be nondeductible if the individual engages in substantial nonbusiness activity. The allocation rules apply where the individual engages in substantial nonbusiness activity at, near, or beyond the business destination; or, when the personal destination is en route to and from the business destination.

The rules apply for travel outside the 50 states and the District of Columbia. Travel to the possessions is considered travel outside the U.S. Travel outside the U.S. does not include any travel from one point in the U.S. to another point in the United States, even though part of the trip is outside the United States.

Allocation is done on a day-to-day basis, in proportion to the number of nonbusiness days during the trip to the entire trip. Each day is considered either entirely a business day or entirely a nonbusiness day. A day spent outside the U.S. is deemed a business day, even though only part of the day was spent on business, if any of the following apply:

  • The taxpayer was traveling to or returning from a destination outside the U.S. in pursuit of a trade or business.
  • The taxpayer's presence outside the U.S. on that day was required at a particular place for a specific business purpose.
  • During hours that are normally considered appropriate for business activity the taxpayer's principal activity was the pursuit of a trade or business.

If the trip is primarily personal in nature, travel expenses to and from the destination are not deductible, even if the taxpayer engages in business activities while at the destination.

Once the amount of travel expenses subject to the allocation and disallowance rules is determined, that amount is multiplied by a fraction, equal to the number of nonbusiness days during the trip, divided by the total number of business and nonbusiness days during the trip.

These restrictions do not apply when any of the following conditions applies:

  • Travel time outside the United States do not exceed one week.
  • Nonbusiness travel time is less than 25 percent of the total time.
  • The individual lacks substantial control over the travel arrangements (other than the timing of the trip).
  • The vacation portion of the trip is a not a major consideration of the taxpayer.

For more information about deducting foreign business travel expenses, contact the professionals at Grossman St. Amour CPAs PLLC at 315.422.1391 or info@gsacpas.com.

Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.  Tax articles in this site are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. 

 




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Grossman St. Amour CPAs PLLC
110 West Fayette Street, One Lincoln Center, Suite 900 • Syracuse, NY 13202
T 315.424.1120   F 315.422.0829   info@gsacpas.com
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