Convention and Cruise Ship Expenses

You can deduct your travel expenses (including travel, lodging, and meals for yourself) when you attend a convention if you can show that attending the convention benefits your business.

You can satisfy the business relationship test by showing that your business duties and responsibilities tie in to the program or agenda of the convention. The agenda doesn't necessarily have to deal specifically with your duties or responsibilities — a tie-in is enough. You must, however, show some kind of income-producing purpose for attending the convention. In any case, you won't be able to deduct any nonbusiness expenses (sightseeing, for example) you incur while attending the convention.

The rules become even stricter when the convention is held outside North America or on a cruise ship. Basically, the IRS doesn't want people deducting their vacations. However, they recognize that at least some of these trips are for bona fide business purposes. Here's what you need to know:

Conventions held outside North America. In order to be able to deduct expenses for attending a convention outside the North American area, the convention must be directly related to your business and it must be as reasonable to hold the convention outside North America as in it. For example, it would be reasonable to hold the convention outside North America if many of the convention's attendees lived overseas. You must also satisfy the requirements for deducting business travel expenses outside the U.S..

Conventions held on cruise ships. The following requirements must be met before you can deduct expenses incurred for a convention or seminar held on a cruise ship:

• The convention must be directly related to the active conduct of your business.
• The cruise ship must be a vessel registered in the U.S.
• All of the cruise ship's ports of call must be located in the U.S.(or its possessions).
• You must attach to your income tax return a written statement signed by you that includes the total days of the trip (excluding the days you spent traveling to and from the ship's port), the number of hours each day that you devoted to scheduled business activities, and a program of the scheduled business activities of the meeting.
• You must attach to your income tax return a written statement signed by an officer of the organization or group sponsoring the convention that includes a schedule of the business activities of each day of the convention, and the number of hours you attended the scheduled business activities.

If you meet the requirements, you can deduct up to $2,000 annually of the expense of attending a seminar or convention on a cruise ship. In the case of a joint return, a maximum of $4,000 would be deductible if each spouse attended qualifying cruise ship conventions.