Travel Entertainment and Auto Rules 2023 - 16.5 CPE

Updating practitioners on current developments, this core program examines and explains the practical aspects of travel and entertainment deductions. Fun-damentals are reviewed and planning opportunities are identified. Creative strategies are discussed and evaluated along with traditional approaches. Tax-payers are once again looking to their tax professionals for guidance and plan-ning related to travel and entertainment expenses. The goal of this course is to understand and solve problems. Participants will learn to master the proper ad-ministration of these complex and often cumbersome provisions in a humorous and entertaining format.
Completion Deadline & Exam: This course, including the examination, must be completed within one year of the date of purchase. In addition, unless otherwise indicated, no correct or incorrect feedback for any exam question will be provid-ed.
Course Level: Overview. This program is appropriate for professionals at all or-ganizational levels.
Field of Study: Taxes
Prerequisite: General understanding of federal income taxation.
Advanced Preparation: None
Learning Assignments & Objectives
As a result of studying each assignment, you should be able to meet the objec-tives listed below each assignment.
ASSIGNMENT SUBJECT
Chapter 1 Travel Expenses
At the start of Chapter 1, participants should identify the following topics for study:
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* Job hunting travel
* Travel expenses of investors
* Transportation expenses
* Business purpose requirement
* Circuit Court test for “tax home”
* IRS test for “tax home”
* No tax home
* Two work locations
* Away from home requirement
* Temporary & indefinite assignments
Learning Objectives
After reading Chapter 1, participants will be able to:
1. Recognize the importance of travel expenses and determine the dif-ference between transportation and business travel under §162 by identifying types of business travel expenses and requirements of §162, §165, and §195.
2. Specify deductible travel costs to find a new job, identify investor travel expenses, and determine deductible transportation.
3. Identify the business purpose requirement, the complications of mixed business and personal travel, and costs at a destination.
4. Recognize the IRS’s and Circuit Courts’ definition of “tax home,” identify when a taxpayer lacks a tax home, and specify the “away from home” requirement including the sleep and rest rule.
5. Identify temporary and indefinite job assignments recognizing the critical factor in distinguishing the two job assignments.
After studying the materials in Chapter 1, answer exam questions 1 to 27.
ASSIGNMENT SUBJECT
Chapter 2 Categories of Business Travel Expense
At the start of Chapter 2, participants should identify the following topics for study:
* Domestic business travel primarily for business
* Point-to-point rules
* Extended stay or side trip rule
* Foreign business travel
* Conventions & meetings
* Conventions outside the North American area
* Cruise ship conventions
* Luxury water travel
* Spousal & companion travel expenses
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* Aides to sick & handicapped individuals
Learning Objectives
After reading Chapter 2, participants will be able to:
1. Identify the elements of domestic business travel, the 51/49 test, and what costs are deductible.
2. Specify the “point-to-point” rule for different modes of transporta-tion and which expenses incurred on a business trip with an extended stay or side trip are deductible.
3. Identify the rules for foreign business travel by:
a. Recognizing when foreign travel is fully deductible or disallowed, specifying the foreign travel allocation rule, and determining total al-lowable foreign travel expenses; and
b. Determining the allocation of expenses incurred in traveling on a foreign side trip and specifying exceptions to the general rule.
4. Recognize the deduction of convention and meeting expenses based on Reg. §1.162 by:
a. Specifying factors under the agenda test and how the application of this test determines if a meeting is predominantly business relat-ed;
b. Identifying the availability of the convention and meeting deduc-tion to professional groups, self-employed persons, employees, and the videotaped lecture rule; and
c. Determining the differences between foreign conventions and for-eign travel and citing convention expenses permitted under §274(h)
5. Determine the rules and limitations on non-north American and cruise ship conventions.
6. Specify the luxury water travel exception, recognize the companion travel expense limitations, and identify whether expenses for aides to handicapped taxpayers accompanying the taxpayers on business trips are deductible travel expenses.
After studying the materials in Chapter 2, answer exam questions 28 to 44.
ASSIGNMENT SUBJECT
Chapter 3 Local Transportation
At the start of Chapter 3, participants should identify the following topics for study:
* Parking fees
* Trips to a union hall
* Commuting & economic hardship
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* Irregular worksite assignments
* Home office
* Hauling tools & equipment
* Transportation between different sites
* Transportation between different jobs
Learning Objectives
After reading Chapter 3, participants will be able to:
1. Determine what constitutes transportation, local transportation, and commuting, recognize when parking fees are deductible, and specify the effect of the Washburn case on commuting deductions.
2. Identify the regular/irregular rule, determine a temporary work site under R.R. 90-23, recognize the impact of R.R. 94-47 and R.R. 99-7 on transportation between a taxpayer’s residence and workplace, specify the §280A home office requirements and their impact on business transportation, and identify the hauling tool rule.
After studying the materials in Chapter 3, answer the exam questions 45 to 50.
ASSIGNMENT SUBJECT
Chapter 4 Automobiles
At the start of Chapter 4, participants should identify the following topics for study:
* Apportionment of personal & business use
* Deduction limitations using the actual cost method
* Expensing - §179
* Predominate business use rule
* Auto leasing
* Standard mileage method
* Auto trade-in vs. sale
* Employer-provided automobile
* Nonpersonal use vehicle
* Reporting of an employer-provided automobile
Learning Objectives
After reading Chapter 4, participants will be able to:
1. Recognize the apportionment of business and personal use of an au-tomobile by:
a. Citing accepted methods of making an apportionment; and
b. Identifying the automobile costs that are generally deductible and nondeductible and their exceptions.
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2. Determine actual cost method expenses, auto depreciation, and §179 expensing by:
a. Specifying a car for purposes of these provisions, identifying basis for figuring depreciation, and determining when a car is placed in service; and
b. Identifying depreciation methods and conventions under the mod-ified cost recovery system (MACRS) and citing the depreciation caps that apply to different vehicles.
3. Recognize auto depreciation "caps" and post-recovery depreciation limits.
4. Determine the §179 expensing deduction’s relationship to deprecia-tion, its limitations, and when to use it.
5. Specify the impact of the §280F predominate business use rule on depreciation, excess deductions, and the former investment tax credit.
6. Determine automobile leasing elements recognizing vehicle pur-chase differences, specify various leasing terminology including closed-end and open-end, identify monthly lease payments and income inclu-sion amounts, and cite the leasing deduction restrictions.
7. Identify the mechanics of the standard mileage method including the ability to switch methods, deduct charitable and medical transporta-tion, and MACRS depreciation limitations.
8. Recognize the differences between trading and selling a vehicle and the use of employer-provided vehicles as §132 fringe benefits by:
a. Determining the value of an employee’s personal use of such an automobile under the valuation methods and the exclusion limits for related deductions; and
b. Specifying nonpersonal use vehicles, what reporting standards ap-ply, and identify the reporting requirements for employers.
After studying the materials in Chapter 4, answer exam questions 51 to 81.
ASSIGNMENT SUBJECT
Chapter 5 Entertainment
At the start of Chapter 5, participants should identify the following topics for study:
* Definition of entertainment
* Allocation – business & nonbusiness persons
* Former directly related test
* Former associated test
* Statutory exceptions
* Quiet business meals & drinks repeal
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* Ticket purchases
* Percentage reduction for meals & pre-2018 entertainment
* Entertainment facilities
* Business gifts
Learning Objectives
After reading Chapter 5, participants will be able to:
1. Determine entertainment using Reg. §1.274 and other related de-ductible business expenses by:
a. Recognizing the objective and subjective aspects of entertainment and occasions where entertainment might be reclassified as a gift or travel expense;
b. Identifying the pre-2018 stepped process of determining qualifying allowable entertainment expenses and the former allocation and proration entertainment expenses including meals; and
c. Specifying the elements of the ordinary and necessary requirement under §162.
2. Identify the pre-2018 deductible entertainment tests of §274 by:
a. Specifying the conditions of the former “directly related” test and examples of clear business settings that were presumed to meet the test;
b. Determining the meaning of the former “associated with” test in finding whether expenses have a business purpose;
c. Identify former deductible home entertainment expenses, deter-mine the prior limits on ticket purchases, and cite provisions under which goodwill entertainment was previously deductible, and
c. Specify the remaining statutory exceptions to §274 identifying the repealed exception.
3. Recognize the 50% reduction for meals and pre-2018 entertainment and related expenses including exceptions, determine what constitutes an entertainment facility specifying excluded facilities types and costs, and recognize the effect of OBRA ’93 on club dues.
4. Identify the tax benefits and substantiation requirements for busi-ness gifts, employee achievement awards, and sales incentive awards by:
a. Specifying the business gift dollar limitation and the incidental cost gift exclusion;
b. Recognizing the tax treatment of joint spousal gifts and exclusions to the annual limitation; and
c. Citing conditions that must be met for costs from a §74 qualified plan award program to be deductible.
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After studying the materials in Chapter 5, answer the exam questions 82 to 97.
ASSIGNMENT SUBJECT
Chapter 6 Substantiation
At the start of Chapter 6, participants should identify the following topics for study:
* Elements to be substantiated
* Separate expenses
* Adequate records method of substantiation
* Sufficiently corroborated statements method of substantiation
* Exceptional circumstances method of substantiation
* Written policy statements
* Treating vehicle as 100% personal
* Exempt vehicles
* Farming vehicles
* Additional information requirements
Learning Objectives
After reading Chapter 6, participants will be able to:
1. Identify expense categories subject to the detailed substantiation re-quirements of §274(d) and the exceptions to these requirements, and specify elements to be proven and which elements must be proven for the expense type.
2. Cite ways to substantiate travel and pre-2018 entertainment expens-es using required records by:
a. Specifying when record entries must be made;
b. Selecting a sampling of the use of listed property for portions of a taxable year; and
c. Identifying documentary evidence.
3. Recognize the sufficiently corroborated statements method of sub-stantiation including when this method can be used, and determine methods that can be used to substantiate the requisite elements of listed property expenditures and how long records should be retained.
After studying the materials in Chapter 6, answer the exam questions 98 to 106.
ASSIGNMENT SUBJECT
Chapter 7 Reporting & Reimbursement of T&E Expenses
At the start of Chapter 7, participants should identify the following topics for study:
* Employees
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* Accountable plans
* Adequate accounting
* Non-accountable plans
* Self-employed persons
* Meal & pre-2018 entertainment expenses for self-employed
* When an employer can deduct expenses
* Meals and employer-provided autos
* Disclosure of business use of automobiles
* Disclosure of business use of other listed property
Learning Objectives
After reading Chapter 7, participants will be able to:
1. Identify whether an employee must file Form 2106, determine the substantiation requirements of TRA ‘86 and Family Support Act 1988, and specify the requirements for an accountable plan and “reasonable period of time” safe harbors.
2. Determine how to adequately account for travel and other employee business expenses by:
a. Specifying federal per diem rate methods and whether an employ-er is related to an employee to decide which per diem rate may be used;
b. Identifying incidental expenses under R.R. 2002-63 for accounting purposes and specifying the meal break out and 50% limitation; and
f. Recognizing accountable plans and nonaccountable plans and their correct reporting of employee reimbursements.
3. Determine how to report income and expenses with or without ade-quate accounting, specify the differences between entertainment and non-entertainment expenses incurred by an independent contractor, identify whether an employer can take deductions for reimbursed trav-el, meals, and/or business gifts, and determine how to make appropri-ate disclosures on tax returns of required information.
After studying the materials in Chapter 7, answer the exam questions 107 to 120.
Notice
This course and test have been adapted from materials and information contained in the above text and any supplemental material provided. This course is sold with the understand-ing that the publisher is not engaged in rendering legal, accounting, or other professional ad-vice and assumes no liability whatsoever in connection with its use. Since laws are constantly changing, and are subject to differing interpretations, we urge you to do additional research and consult appropriate experts before relying on the information contained in this course to render professional advice.