Time Share

[oceanlovin'ea]

Well, it is 10 PM in Florida and I am still working on a return for the lady across the street from me. I don't have the heart yet to tell her that I don't think the post office is doing midnight stamping for extension returns. So at this point their return will be postmarked the 18th and be one day late. Maybe they will show a loss on their business again and not owe any money.,

My real question is they have a time share in Orlando but each year they trade out to go somewhere else, usually still in Florida. While they are at the timeshare they use that week to work their direct sales business, make contacts, do demonstrations of products, etc. Is it possible to deduct the fees they pay for their timeshare as a business expense, since they are conducting business while they are there.

If they can, they are smart people.

Thanks
Linda F

[jainen]

Primary purpose

If the PRIMARY purpose for the trip (generally measured by time spent in various activities) is business, then the lodging is a business expense. If that level of expense exceeds income, then you also have to evaluate the hobby loss rules. I'd rate it possible but unlikely. To overcome the vacation element they should have substantial business records including a marketing plan. Usually you get the lame argument, "Everything I do is business because everyone I meet is a potential customer."

[oceanlovin'ea]

Time factor

They do have a legitimate direct sales business. Make around $10,00 a year in commissions. She has training sessions and does promotions. So they are running a business and foresee it growing quite a bit in the next couple of years.

So I do believe that they use the time to work their business. They may know people in the area that they go to and are able to do a lot of marketing while they are there.

Would you just list it as travel expense? If they went to another city and stayed in a hotel it would be travel expense. That makes sense to me.

Linda F

[jainen]

fixed asset

They wouldn't own the hotel. Depending on the time share arrangement, this could be a fixed asset instead of travel expense. In my opinion, the fact that they have a legitimate business does not by itself indicate that the primary purpose for holding the time shares and taking the trips is business, even if they do some business demonstrations along the way.

[oceanlovin'ea]

Purchase purpose

She told me that when they decided to buy the time share they did it because they thought it would be a good way to be able to expand their business. Her clients can go to her website and make purchases so it is not necessary for her to live near her clients.
It seems they have thought out ways to expand their business in a logical manner.

Linda F

[jainen]

the key issue

No problem with any of that. But when they go to these various vacation spots, do they or do they not spend MORE time in direct business activities than in personal activities? You have avoided the key issue in each of your posts.

[taxmandan]

Timeshare and business

If their business is all on-line and they don't have to be near the client to conduct business, then what business purpose is there to the time share location? Are they attending trade shows, hosting training seminars for their downline sales people? If so, then appointment records, etc. will tell how much of the time is spent conducting business and how much frolicking in the sand and surf.

[jainen]

Linda's posts

Thank you. I was getting lonely. I'm not saying these aren't business trips. I have no idea whether they are or not. Nothing in Linda's posts says that they are, but perhaps she has the kind of records you suggest.

[oceanlovin'ea]

Yes business trips

I asked her specifically what the purpose of the trips were. She said they were to find new distributors and customers. They spend the majority of the time making contacts and discussing their products. They usually go to different locations in Florida, not just the beaches.

After they sign people up, they are able to go on her website to order or re order products. But the initial contact must be made in person.

So yes, they do spend more time in their direct sales business than in personal pursuits.

She said having the condo or apartment makes it easier to entertain and discuss their products in a comfortable atmosphere. They also have use of the whole facility if they choose to have a larger group than the condo could hold.