I had, as travel expense for continuing education, the purchase of airline tickets.
However, toward the ticket purchase, I used a $200 voucher that the airline had given me due to complications in a prior trip. Can this $200 be included as a travel expense, or would it disqualify since I didn't pay out of pocket?
I probably should have asked this question before using the voucher, since if it can't be applied toward my expense, I would have saved the voucher for a personal vacation....
Thanks
You are correct. You should have asked first. Your tax basis in the voucher is $0, therefore it does not add to your deductible travel expense.
Why is the voucher basis $0? If he'd deducted the earlier trip's ticket cost, then I agree. But suppose it was a personal trip where he'd paid for First Class, and was downgraded to Coach on one leg, where the value (and price) difference was $200. Then I'd contend that the voucher's basis is $200.
Under other circumstances, he might have paid $400 for travel; he ended up getting different travel (not as good for him as what he paid for) plus a $200 voucher. In that case, he might reasonably claim that the changed travel was worth $300 (e.g. he had to pay $100 for a hotel room for the extra night), so he got $500 total value for $400, and the basis for the $200 voucher would therefore be $160. At the extreme, he got $400 worth of travel + a $200 voucher for $400, so the voucher's basis is $133.33.
Seth
In addition, if his basis was zero, then the voucher would be taxable income.
-Mark Bole
,
Just the opposite. If receiving the voucher generated taxable income, then the basis would be equal to the income recognized.
Taxable income upon receipt of the voucher and basis are both zero because the IRS says so. The IRS says so because both valuation and enforcement are issues the IRS doesn't want to deal with.
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