Later this month, I’ll be traveling back home to Toronto to enjoy the city’s vibrant culture and hopefully some Maple Leafs hockey. Part of my trip will include attending a 3 day cross-border tax conference in Toronto to get the continuing education credits required to renew my law and CPA licenses. My trip will last five days and there are about six hours of continuing education per class. Will this trip qualify as a tax deduction?
Yes. The primary purpose of this trip is business because I have specified the business continuing education sessions as the reason for the trip and all the days I am in class count as business days. Thus, my business reason for the travel is to get to this educational activity, and once there, each day of the trip is going to be either a deductible travel day or a deductible business education day.
Here’s what I need to do to make this trip fully deductible:
For the class days to qualify for deduction as business days, I must pass a facts-and-circumstances test that shows that these classes provide specific business benefit to the conduct of my practice. The fact that the course I’m taking qualifies for law and CPA continuing education credits automatically says they are of bona fide benefits to my business.
Next, I need to establish that the principal character of my combined entertainment and business activity is the active conduct of the course I’m attending. You can easily assume I’ll be spending more time each day enjoying a Molson at my favorite watering hole in the city or taking in a concert at the legendary Massey Hall than I’ll be spending in class. Not a problem. The IRS regulations specifically state that I don’t need to spend more time devoted to business than to entertainment on my trip.
Lastly, I’ll need the class time at the course to qualify as a business day. A business day at a foreign convention is defined by the regulations as attending at least four out of six hours of scheduled convention activity. Since each class is six hours long, the principal purpose of my day is business.
So what will I get to deduct on this trip?
I’ll be spending four nights at a hotel. I’ll be traveling on day one, going to class on days two, three and four and then returning home on day five. Thus, I’ll be away from home for four nights.
Thanks to Uncle Sam, I’ll be able to deduct the following:
· tax-deductible lodging for four nights,
· tax-deductible travel costs to and from Toronto,
· tax-deductible meals, drinks, and other costs of sustaining life during the trip, and
· tax-deductible entertainment with my fellow CPA’s and Lawyers.
But wait, what if this same course is offered here in Los Angeles. Is this trip still tax deductible?
The answer is yes. As long as the course takes place in the tax-defined North America area, I can take the course in Toronto even when that same course is offered in Los Angeles. Again, I have an ordinary and necessary business reason for my education and trip to Toronto.