Instead of using actual expenses in computing allowable incidental expenses paid while away from home, employees and self-employed individuals who do not pay or incur meal expenses may use an amount computed at the rate of $3 per day. So if they attend a convention or trade show under an all-inclusive plan where meals are included, a legitimate tax deduction for incidental expenses of $3 per day is available without having to substantiate that amount.
Tax rules clearly state that all travel expenses are tax deductible if the trip to the convention or trade show was entirely business related. Suppose, however, that an attendee decides to combine that trade show attendance with a vacation.
So long as the trip is primarily for business and, while at the convention or trade show, you extended your stay for a vacation or made a non-business side trip, show-goers may still deduct their business-related expenses.
If, however, the trip was primarily for personal reasons, such as a vacation, the entire cost of the trip is a non-deductible personal expense. Naturally, you can deduct all expenses incurred while at your destination that are directly related to attendance at the trade show or convention.
Keep good records
In order to claim any tax deductions, every tool and equipment professional must be able to prove all expenses were actually paid or incurred. (In fact, the following expenses have been deemed by the IRS as particularly susceptible to abuse: expenses with respect to travel away from home including meals and lodging, entertainment expenses and business gifts.) Meals and incidental expenses while away from home on business, especially those related to attending a trade show or convention, are a legitimate tax deduction.
It's important to remember, however, that although the actual amount of the deduction can be taken from tables provided by the IRS, it remains necessary to prove the time, place and business purpose.
Writing-off education, fun and business
Under our tax rules, all that is required to deduct the expenses of attending a trade show, meeting, convention or other event, is a legitimate business purpose for attending.
Furthermore, the convention does not even have to deal specifically with your tool and equipment business; it is enough that you can reasonably prove that you've gained some business benefit by attending that event.
Imagine improving your business, furthering your education and having fun — all in one trip to a convention, trade show or meeting. Best of all, thanks to our tax rules, Uncle Sam's got you covered.
Selling your business or your wares
Most of us can attend a trade show or convention and claim the expenses as an income tax deduction. Similar tax deductions are also available where a tool and equipment distributor, jobber, supplier or his or her business, has a promotional or sales booth at a trade show. The expenses of exhibiting or selling at a trade show are also tax deductible.
Under income tax laws, it is immaterial whether the booths are set up at a show for promoting or selling your business, your products or your services. Even where the business is engaged in direct sales to the public, the expenses, for the most part, are tax deductible.
Just remember that expenses incurred in creating a unique display or booth may not qualify for an immediate income tax deduction. If that display or booth is for one-time use, and is not adaptable to other events or venues, an immediate tax deduction for property with a useful life of one year or less might be in order. Otherwise, the depreciation rules come into play.
Tax rules governing the deduction of travel, meals, lodging and entertainment, as well as the per diem deduction, are also available to every tool and equipment professional that uses trade shows, conventions and meetings to sell their products or services.
Mark Battersby is a nationally syndicated tax and financial columnist and author.
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