J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Foreign Travel

Entirely for Business

If you travel abroad entirely on business, all of your travel costs are deductible. (Meal and entertainment costs are still subject to the 50% limit.) If your trip is considered to be entirely business, then even if some time is spent sightseeing or on other personal activities, all of your transportation expenses are still deductible. There are special rules for determining whether your trip is considered to be entirely for business. You are treated as having spent your entire trip on business if you meet any of the following 4 rules.

1. You do not have substantial control over arranging your trip; travel is presumed to be entirely for business. You do not have control if you are an employee who is reimbursed for travel and are not related to your employer nor a managing executive (someone whose actions are not subject to veto by another). As a small business owner, it is virtually impossible to satisfy this rule. However, you can still fall within 1 of the other rules.

2. You are outside the United States for a week or less (7 or fewer consecutive days). In counting days, do not count the day you leave the United States, but do count the day of your return.

Example

You fly from Washington, D.C., to Tokyo on Sunday, arriving at Narita Airport on Monday morning. You work until Friday morning, then spend Friday and Saturday sightseeing and shopping. You fly out on Saturday night, arriving back in Washington on Sunday morning. You are ...