Question

Sarah has a three-day meeting in Berlin. She takes an overnight flight arriving early Sunday morning.After resting several hours, she spends the rest of the day sightseeing. She attends the meetings onMonday, Tuesday, and Wednesday. She spends Thursday sightseeing and returns home on Friday. Her transportation cost $1,200 and her five night’s hotel cost $1,250. Her meals were $50 per day fromMonday through Thursday and $30 each on Sunday and Friday. How much can Sara deduct for thisbusiness trip?

Answer 1

Facts of the given case

The case in belong to examine the eligibility of travel expenses for foreign travel out of US. (Berlin)

Trip is primarily for business because attending the meeting is the main purpose of the sarah.

Trip is for less than a week (From Sunday to Friday)

Trip consists of both business purpose and personal activity.

Travel is away from Tax home.

Cost incurred for Transportation = $1200

Cost incurred for Hotel   = $1250

Cost incurred for meals = $(30+50+50+50+50+30)= $260

How much expenses are deductible ?

Trip is out of the US to Berlin so this is a foreign trip and as per fact this trip is primarily a business trip consisting both elements of business and personal.

As per IRS rules if a business trip is for a less than a week (not counting the day you leave but counting the day you arrived) your trip is considered to be entirely for business this means you can deduct all of your trip expenses.

Transportation expenses from and to the destination is fully allowed to deduct for the fully business. Travel can be through air bus or rail. So amount of $1200 towards transportation expenses is fully allowed.

Hotel stay expense is fully allowed to deduct for the fully business trip. So amount of $1250 towards hotel expense is fully allowed.

Meal expenses are allowed up to 50 percent of expensed for a fully business trip. So sarah can deduct up to 50 percent of total meals expenses that will be 50 percent of $260 = $130.

So total amount sarah can deduct for the business trip expenses will be.

Transportation Cost = $1200

Hotel Expenses = $1250

Meals Expemses = $130

Total Deductible Expenses = $2580

Other general criteria for deductible expenses are

Your travel should be primarily for business purposes.

Travel should be away from tax home.

The expenses must be reasonable considering the facts and circumstances.

Good documentation is must specially for foreign travels.

Criteria for 100 percent business trip must be fulfilled otherwise expenses would be allocated on the basis of stay for business cause and personal cause.