Tax tips for trade shows and business travel

While preparing for our ISM-Dallas affiliate and the Southwest Forum trade show, I started thinking about how much harder it is to get suppliers to attend? Of course, with the rising cost of travel and higher demands on most businesses, attending a show can get costly. Especially if you travel by plane, car rentals, hotel bills and meals can add up quickly.

That’s why I found this article in Industrial Distribution very interesting, as it related to tax deductions for business travel and trade shows. For example, did you know before you can deduct any expenses related to attending a trade show you must first determine if the event qualifies for tax deductibility? You have to consider the topic of the show and your purpose in attending. “If a trade show serves a legitimate business purpose, then the related travel expenses are tax deductible,” says Patrick Anderson, principal of Anderson Economic Group in Lansing, Michigan. Trade shows were originally set to help offset the costs on conferences.

In years past, the exhibitor would take a group out to dinner after the show. Times are changing.As the Industrial Distribution article points out, Andrew Benedict, tax manager at RGA Advisors in New York,  says only 50% of the meal cost is deductible because the other half represents an expense you would have even if you were not on a business trip.

You cannot deduct meals if the expenses are lavish or extravagant, adds Benedict.  I really don’t see how you can determine the “lavish or extravagant” because it’s a relative term, isn’t it?  A friend of mine in sales was entertaining a major client at an oil show. The client continued to order very expensive wine for her group, with the bill turning out over $2,000. Believe me, he was concerned when he turned this expense report in.
“Generally you cannot deduct travel expenses of a spouse who does not play a substantial business role,” says Anderson, adding that this is a common area of abuse and one at which the IRS looks closely.

Many suppliers budget funds for trade shows. It is a good idea to approach the supplier early so it can be put in the budget for the year. You can’t just say, we are having a trade show next month, can you come?