Discussion:Annual Meeting Travel Expenses

Someone give me strength!

Jack Benny's accountant.

Since KJM lives in Florida ... the former accountant probably also had Wesley Snipes as a client so he is tied up (so to speak for the next 10 yrs.

I love the Jack Benny video ... I think all of the people there are dead now?

Why don't you ask them to provide you with a copy of the minutes of meetings?

Business groups, including accountants turn trips to fun destinations into deductible business meetings all the time.

On our annual ski trip to Snowbird, Utah, there are often seminars for physicians. The posted schedule shows classes from 7-9am and from 7-9pm, which I always thought was pretty clever!

I agree with you that you need to stand your ground, even at the risk of losing the client. Perhaps they would agree that they will comply with the requirements of making the trip deductible in the future, now that you are advising them of how to do so.

They have to meet one of four exceptions for travel outside the US (see pub 463 for a good outline) ... 1. No substantial control, 2. Outside United States no more than a week, 3.Less than 25% of time on personal activities, or 4. Vacation not a major consideration. It does not sound like they met any of them. Went you said family ... and husband and wife own the corp ... I would assume the whole traveling party are not stockholders.

One of my favorites is "If the IRS sees this, they will expand the audit and go up your ....... with a microscope. Oh and by the way, I want a specific letter stating you were told by me of the audit risk and you hold me harmless.

Cir 230 §10.34 (a) Realistic possibility standard. A practitioner may not sign a tax return as a preparer if the practitioner determines that the tax return contains a position that does not have a realistic possibility of being sustained on its merits (the realistic possibility standard) unless the position is not frivolous and is adequately disclosed to the Internal Revenue Service.

I don't see without more facts there is anyway that KJM could be held harmless as a Cir 230 professional.

Section §10.34 (c) provides a little wiggle room since I doubt that KJM was with them at the annual meeting.  

"(c) Relying on information furnished by clients. A practitioner advising a client to take a position on a tax return, or reparing or signing a tax return as a preparer,generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete."

It all depends on the facts ... a family of share holders holding meetings several days or more to chart the direction of the corporation coming out with a business plan would be realistic and make the trip at least partial deductable ... but a husband and wife annual meeting for two weeks?

If we fired every client we thought was a jerk, we would be broke.

Back to point, I can be somewhat aggressive at times when I believe we have basis, but I hate these "shareholder meeting" expenses. I was approached recently by a GOOD company that set up a holding company LLC in Nevada, you get the idea. That meeting ended quickly.

He and his wife went to Las Vegas for a week and wanted to use that as his annual meeting trip. I noted it was a single owner Sub S corp and that he could have his annual meeting in his shower if he wanted, but writing off his entire trip to Vegas seemed over the top to me. He was not happy with the answer I was not happy with the attorney. Eventually, the client left for another CPA because he felt I was "working for the IRS and not him". I don't miss him. I say stand your ground

It's sorta like being on a roll in Vegas. You don't know how long you'll last and you don't know if you'll come out ahead.

And maybe anticipate the microscope...