Vacationing While on Business Travel – Is it Deductible?

July 15, 2015

As the summer heat cranks up, it is tempting to squeeze in some leisure time during a business trip. But what does that do to the ability to deduct the costs associated with the trip?

If the trip is structured so that it is primarily business, the cost of the round trip transportation is deductible. The cost of lodging while on business is also deductible, as is 50% of the cost of meals.

To be considered “primarily business.” there is no bright line test; rather it is based on facts and circumstances. Reg. § 1.162-2(b)(2) speaks to the relative amount of time spent for business compared to personal. Presumably, if the majority of the days contain business activities, the trip was primarily for business.

What about weekends? For example: a conference taking place Thursday, Friday, and wrapping up Monday; or concluding business on Friday but taking a flight out on the weekend because it would result in more overall savings than taking a flight on Friday. Under the first set of facts, the weekend would still count as business days because it would be impractical to fly home Friday and back Monday. Likewise, under the second set of facts, the weekend counts as business days because the entire trip ends up costing less by staying over a weekend. The latter is addressed in PLR 9237014, as a “common sense” test. While private letter rulings cannot be cited as precedent or as the basis for taking a tax position, they do give an insight as to how the IRS thinks and how they would tend to view similar circumstances.

What about the cost of bringing the family? Some of it may still be deductible. For instance, renting a hotel room or car will cost the same whether there is one person or four people. But if additional costs are incurred, such as needing two rooms or a passenger van, the additional costs are not deductible. Likewise, their meals are not deductible, nor are their airfare costs. Bottom line – the deduction is limited to what it would cost to travel alone. That said, with proper planning and cozy living arrangements, the family could come along for a subsidized vacation.

Got questions? Connect with an experienced Aprio advisor today.
Schedule a Consultation

Stay informed with Aprio.

Get industry news and leading insights delivered straight to your inbox.

Stay informed with Aprio. Subscribe now.