Travel Expenses

[MarkCTX]

Client travels a lot in her business. Often times she stays in apartments owned by clients, associates, or friends (never relatives). She pays the owner for lodging and gets a receipt. The owner of the apartment is not part of these rental network chains. It's purely informal. Does this arrangement qualify as travel expense? I cannot find this topic covered in the instructions.

Mark

[Lion]

Did her business send Forms 1099-MISC for the rents?

[mastertaxguy]

Employee or self employed?

Client travels a lot in her business. Often times she stays in apartments owned by clients, associates, or friends (never relatives). She pays the owner for lodging and gets a receipt. The owner of the apartment is not part of these rental network chains. It's purely informal. Does this arrangement qualify as travel expense? I cannot find this topic covered in the instructions.

Mark

1. Is your client traveling on business for her job as an employee?
2. If not an employee, is she traveling on business for her own 'schedule c self-employed income?"
3. If #1, does her employer have a reimbursement plan? If so, has the taxpayer applied for reimbursement (if not, no deduction allowed on form 2106).
4. If #1 does her employer provide her with a travel allowance? If so, a 2106 form/worksheet should show how much she can deduct along with other business travel expenses, or how much she has to report as income if the reimbursement was greater than what she actually spent.
5. If #2, a travel expense is a travel expense. If she paid someone more than $600.00 in any one year, than the earlier post about 1099's comes in play.
6. You state you could not find anything "in the instructions." Have you also consulted TTB Pp. 4-25 to 4-26 and TTB chapter 8, and/or IRS publication 463 and 535?
7. How have you treated these expenses in the past, or if this is a new client how has she treated these types of expenses in the past?
8. My view would be the taxpayer, as an employee or self-employed individual, is paying board for intruding on her clients and friends which would be more of a personal expenses not a business expense. Kind of like staying with the inlaws when you are on a business trip to pocket the advance 'per diem' provided by the employer or meal money provided professional athletes.

[MarkCTX]

There were no 1099's sent as a result of these transactions. Where in the literature is this type of transaction discussed?

Mark

[mastertaxguy]

And does your client have a tax home

One more matter: does this taxpayer/client have a tax home?

[mastertaxguy]

And does your client have a tax home

One more matter: does this taxpayer/client have a tax home?

[MarkCTX]

Good points.

She is self-employed. She does have a tax home where she conducts most of her business. The out of town rentals are the only items that apply in this case. Some may be over $600 so 1099 may be required. I looked in Pub 463, Topic 511 and Pub 535 before I posted. This scenario can't be all that rare but a bit unusual since she is paying for lodging to a non-commercial enterprise.

Mark

[mastertaxguy]

Good points.

She is self-employed. She does have a tax home where she conducts most of her business. The out of town rentals are the only items that apply in this case. Some may be over $600 so 1099 may be required. I looked in Pub 463, Topic 511 and Pub 535 before I posted. This scenario can't be all that rare but a bit unusual since she is paying for lodging to a non-commercial enterprise.

Mark

1. Of course, business travel mileage or expenses are a separate item.

2. These "stay overs" were for income producing activities, yes?

3. If the TP is providing services for which a license of some type is require in a state where she does not reside or does not have a license, another set of issues may be raised.

[Burke]

If the lodging is a legitimate travel expense that she could otherwise claim if she stayed at Holiday Inns, then I see no reason she could not claim it. But the 1099 thing could be an issue, if rents exceeded the $600 threshold requirement. And of course, receipts would be required as well as evidence of payment (i.e, check, etc.)