Question

In June of this year, Dr. and Mrs. Savage traveled to attend a three-day professional conference. Dr. Savage, a self-employed practicing surgeon, participated in scheduled technical sessions dealing with the latest developments in surgical procedures. On two days, Mrs. Savage attended group meetings where various aspects of family tax planning were discussed. On the other day, she went sightseeing. Mrs. Savage does not work for her husband, but she prepares their tax returns and handles the family investments. Expenses incurred in connection with the conference are summarized below:

Airfare $3,600    (two tickets @ $1,800 each)
Lodging $435      (single and double occupancy are the same rate—$145 each day)
Meals $320 x 3 days     (Split equally)
Conference registration fee $740   (includes $120 for Family Tax Planning sessions)
Car rental $335

A) Do Mrs. Savage’s activities constitute a trade or business? If they do, how much can they deduct of these expenses?

B) How much, if any, of these expenses can the Dr. Savage deduct? Explain each amount. What is the total?

Answer 1

		DR SAVAGE	PER DAY	MRS SAVAGE	PER DAY
AIRFARE		1800	600	1800	600
LODGING		435	145	0	0	(as same for single and double )
MEALS		480	160	480	160	(equally splitted)
CONFERENCE		620	206.666667	120	60	(AS FOR 2 DAYS ONLY)
CAR RENTAL		167.5	55.8333333	167.5	55.83333	(splitted)
A)	YES, her activity is trade or business.
	total expenses to be deducted for business use are as followes
AIRFARE		1800
LODGING		0
MEALS	160*2	320
CONFERENCE		120
CAR RENTAL	56*2	112
total		2352
B)
As dr savage's entire trip is for business use he can deduct the entire amount i.e
AIRFARE		1800
LODGING		435
MEALS		480
CONFERENCE		620
CAR RENTAL		167.5
total		3502.5