Travel Expenses deduction question

wrote

It's kind of unclear why you went there when you did, and that will determine whether all or part of the trip is business deductible or not. What was the purpose of going when you did?

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Actually I've done some more research and wanted to revise my initial question in this thread. The same stuff I said in the previous message applies: I own my own company doing grant writing, I live in Denver, but relocated for six weeks to San Diego. I am starting to seriously pursue business leads this year (I was here last year, and had a few contacts but didn't pursue opportunities very agressively). For the first two weeks I was here I only had time to focus on keeping up with my Denver clients and maintaining the business. MY REVISED QUESTIONS ARE:

1) I would like to qualify as being on temporary assignment, but I wasn't sure how much contact with prospective clients/business leads I would need to have to meet that criteria? I am meeting with individuals who might end up becoming clients, but on other days it is enough to just keep up with my existing responsibilities to the Colorado nonprofits I work for. If I am able to take the on assignment deduction, does that include rent costs, mileage and a per diem (or do I have to itemize food/incidental expenses rather than per diem?). 2) If I have to deduct day-to-day rather than being classified as on assignment, I have a few other questions: a) How much contact will I need with local business opportunities to qualify to deduct my mileage from from Denver to San Diego.... It is likely that a majority of the days I will be here I will have either done work for my Denver clients, or not have had any contact with potential San Diego clients. b) I met a woman the other day who could be a potential client, and started to do follow-up research for her organization the following day. If the research and work I do the following day doesn't put me in direct contact with the potential client, is that day's rent/per diem deductable? In other words, on the following day I wasn't in contact with them via phone or in-person, but I was doing some (uncompensated) legwork on their behalf that may lead to paying work. c) I've arranged for meetings with potential clients via initial emails (an introductory email about who I am and stating that I'd like to meet with them and will follow up later with a phone call). Do I have to have a phone conversation or meeting to trigger the per diem/ rent write off? Thank you very much for giving me some insight on this - I'm very eager to learn what is allowable!

Thanks for your reply to my post! While I didn't have a fixed schedule of meetings and business-related events in California at this time of the year, I have been wanting to expand and grow the business, and just decided to start reaching out and developing new contacts right now. Is it realistic to say that allocating six or seven weeks to build new contacts is legitmate, and would qualify as being "on assignment"? Jay

I should also add that for the last five consecutive days I have made contacts, met with folks, arranged for meetings, and done some follow-up work with prospective clients, and I do anticipate that the rest of the way I will be doing that level of contacts with prospective clients.

Travel expenses are the ordinary and necessary expenses of traveling away from your tax home for your busines, You are traveling away from your tax home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away. The "temporary assignment" you are talking about is used in making a determination if you are away from your tax home or not so as to prevent you from claiming you were traveling and had travel expenses when actually you were working in your tax home. Denver is your tax home so the travel to San Diego is deductible as long as it meets the requirements for the type of travel expense and as long as they are ordinary and necessary expenses for traveling away for your business. More info here:

Rudy

Disclaimer: The posted answer is for educational purposes only and Lizcano Tax Services, LLC and/or Rodolfo Lizcano have not been engaged to render any tax, accounting, legal, or other professional services.