- 4 - and met with Chinese health officials, for either half of the day or for the entire day. Two days, Thursday, April 1, and Saturday, April 3, were fully devoted to sightseeing. Respondent argues that the expenses of the trip were not “ordinary and necessary” business expenses within the meaning of section 162(a) and that petitioner did not substantiate the deductions under section 274(d). The regulations provide that travel expenses are deductible only if the trip is related primarily to the taxpayer’s business. Sec. 1.162-2(b)(1), Income Tax Regs. One of the important factors in deciding whether a trip is primarily business or personal is the amount of time spent on each activity. Sec. 1.162-2(b)(2), Income Tax Regs. In an example in the regulations, if 1 week is spent on business and 5 are spent on vacation, the trip is primarily personal. Id. Thus, if one- sixth of the time is spent on business and the rest is personal, the trip is primarily personal. Further, the regulations provide that expenses paid or incurred in attending a convention may be ordinary and necessary depending on the facts and circumstances of each case. Sec. 1.162-2(d), Income Tax Regs. Based on our review of the record, we believe that respondent's efforts to portray petitioner's trip to China as a personal sightseeing junket are unavailing. While it is true that she spent a certain amount of time touring the Great WallPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011