A client visited Cuba last year (2011) on a humanitarian mission organized by a US 501(c)3 organization. She was told by a CPA friend that 80% of her out-of-pocket costs would be deductible. I've asked her to ask this CPA why he thinks only 80% is deductible. Shouldn't all of her costs be deductible, subject to the usual rules for deducting charitable out-of-pocket expenses, or is there something different about Cuba?
Ira Smilovitz Leonia, NJ
Yes, see
Where? My client did not live in Cuba, did not she derive any income during her visit to Cuba, nor did she make a contribution directly to a Cuban charity. Her visit to Cuba was with the consent of the US government (direct flight from Miami). The references I see to 80% relate to specific examples reducing "business" deductions because taxable income was reduced through the foreign earned income exclusion.
Ira Smilovitz Leonia, NJ
a US 501(c)3 organization. She was told by a CPA friend that 80% of her out-of-pocket costs would be deductible. I've asked her to ask this CPA why he thinks only 80% is deductible. Shouldn't all of her costs be deductible, subject to the usual rules for deducting charitable out-of-pocket expenses, or is there something different about Cuba?
As far as I can tell there are no sanctions other than a fine for someone who goes to Cuba and spends money there without a license to travel. It has been lawful for members of a religious organization to travel and spend money in Cuba since mid-January 2011.
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