Winter 2010
Tradeshow Tax Breaks

by Mark E. Battersby

Attending tradeshows is a great way to scout out new products and to network—but did you know they could qualify for tax deductions? See how attending SPREE and other tradeshows can help save you money.

Imagine an enjoyable—and educational—vacation with Uncle Sam, in the form of our tax laws, picking up part of the tab. That’s right, every cart and kiosk business, the owners, managers and employees of those carts, kiosks or businesses (even someone who is a shareholder/employee), can legitimately claim an income tax deduction for the expenses paid or incurred in attending tradeshows, conventions and meetings. Even specialty leasing managers at malls can deduct tradeshow and convention expenses incurred while seeking prospective tenants at these events.

Much has been said and written about the benefits of attending SPREE. Largely unheralded, however, are the tax-related benefits every attendee can reap. Quite simply, Uncle Sam via tax allowances, will underwrite a portion of the costs associated with attendance at SPREE or other tradeshows, conventions or meetings—if you follow the rules.

The rules

Generally, all that is required in order to qualify for convention-related tax deductions is that you be able to show, if asked, that attendance at the tradeshow, meeting, convention or other event benefited your cart or kiosk business. For those shows or events that are not specifically industry-oriented, a simple statement attesting to the business value an attendee expects, attached to the attendee’s tax return is sufficient.

A major downside to the convention expense deduction is that it is not available for the expenses of attending a convention or meeting related to investments or other income-producing property: rental units or even ownership of the operation’s headquarters are all are income-producing investments. On the plus side, the Internal Revenue Service recently updated the rules for deducting expenses incurred—including convention travel and expenses—while traveling on business.

The tax rules clearly state that all travel expenses are tax deductible if the trip to the meeting or convention was entirely business related. So long as the trip is “primarily” for business purposes an attendee can, while at the meeting or convention, extend their stay for a vacation, make a non-business side trip, or participate in other non-business-related activities. If the side trips are business-oriented, they are deductible. If they are primarily for sightseeing or recreational purposes, tax deductions are usually denied—unless, of course, the side-trips are part of a convention-related package. In that case they are usually related to the purpose of the show and deductible. Business-related travel expenses may still qualify as tax deductions.

Among the tax-deductible travel expenses that qualify for tax deductions are expenditures such as the cost of travel by plane, train, bus or car between your home and the site of the meeting, convention or tradeshow. Also included are the expenses of taxicabs, commuter bus and airport limousines, baggage and shipping costs for samples or display materials, lodging and meals, cleaning, telephone and even tips. And, of course, all the costs associated with attending the event itself.

Although the costs of meals and lodging while away from home for business travel or attending meetings, conventions and tradeshows is deductible, as long as they are not “lavish or extravagant under the circumstances,” the deduction for meals is limited to 50 percent of the total expenses. Food and beverage costs incurred in the course of travel away from home fall within the scope of the tax law’s limitation for meal and entertainment expenses that generally limits the deduction to 50 percent of such expenses.

Family matters

Should any attendee’s spouse, family members or others accompany them to a meeting, tradeshow or convention, either the attendee or his or her cart or kiosk business can deduct their travel expenses. But there must be a bona fide business purpose for the individual’s presence.

Consider the situation of one specialty retailer, Michael Peters who, along with his wife Mary, drove to Chicago to attend a convention. Because Mary is not an employee of Michael’s business and even though her presence served a bona fide purpose, her expenses will not be tax deductible.

Both self-employed cart, kiosk and specialty store retailers as well as their employees can deduct a standard amount, a so-called “per diem allowance” for their daily meals and incidental expenses while attending a convention.

However, even when this standard meal allowance is used, records must be maintained proving the time, place and business purpose of any travel or convention attendance.

Unfortunately, if your employer is related to you or is an incorporated cart or kiosk business in which you are more than a 10 percent principal, the standard meal allowance can’t be used.

The high-low lowdown

In general, the IRS-approved per-diem rates are those paid by the federal government to workers on travel status. However, instead of using the actual per-diem rates for each local, a simplified “high-low” per diem, under which there is one uniform per-diem rate for all “high-cost” areas within the continental U.S. may be used.

Under the optional high-low method for post-September 30, 2009 travel, the high-cost area per diem rate is $258 ($2 more than the previous rate), consisting of $199 for lodging and $65 for Meals and Incidental Expenses (M&IE).

A Revenue Procedure introduced by the IRS provides an optional method for both self-employed specialty retailers as well as employees who are not reimbursed by their employers. Thus, while attending a convention or tradeshow under an all-inclusive plan where meals are included, employees and self-employed cart, kiosk and other specialty retailers may claim a legitimate tax deduction for incidental expenses of $5 per day without the need of substantiating that claimed amount. This is on top of other expense deductions claimed and allowed.

The truth and nothing but

Of course, in order to claim any tax deductions, every retailer must be able to prove that the expenses were both business-related and actually paid or incurred. In fact, the following expenses, which have been deemed by the IRS as particularly susceptible to abuse, must generally be substantiated with adequate records or sufficient corroborating evidence: expenses with respect to travel away from home (including meals and lodging), entertainment expenses, and business gifts.

Although the actual amount of the deduction can be taken from tables published by the IRS, it remains necessary to prove (through adequate records or sufficient corroborative evidence) the time, place and business purpose of the convention-related travel. Documentary evidence, such as receipts or paid bills, is not generally required for expenses that are less than $75. However, documentary evidence is required for lodging expenses.

Win-win policy

Imagine reaping business benefits such as meeting new suppliers, and getting an education while enjoying a pleasurable trip. Best of all, so long as you reasonably can be expected to gain some business benefit from attending, Uncle Sam, in the form of our tax laws, will pick up a part of the cost of attending SPREE, or other shows, meetings and conventions.

Deals in Vegas

You can attend SPREE for a lot less than you think. Here are some deals worth checking out.

by Bernadette Starzee

By planning carefully, you can attend SPREE and stay and play in Sin City without parting with a ton of cash.

In the specialty retail industry, SPREE is a must-attend event. “SPREE is the world’s largest event completely dedicated to the cart and kiosk industry,” says Debbie Lahti, SPREE tradeshow director. “Retailers, wholesalers, service providers and shopping center personnel come year after year to find the hottest new products, discover new location opportunities and learn the tools and tips to continue to grow their business.”

Lodging deals

While offering a wide range of entertainment and dining options for tradeshow attendees, Las Vegas is also home to a broad spectrum of lodging. Mandalay Bay, where SPREE will be held, will offer great deals for attending. Attendees can get a special group rate—$159 single/double if they identify themselves as SPREE participants while
making the booking before March 15.

For other budget-conscious options, Excalibur Hotel and Casino, located at the heart of The Strip, offers reasonably priced rooms and a wide range of entertainment options, including the Castle Walk with its Medieval-style shops and street vendors and a recently renovated pool complex.

Attendees can try their luck at the Casino Royale Hotel and Casino, which offers no-frills guest rooms in the middle of the action—you can cross the street to see the volcano erupting regularly at The Mirage, watch the pirate battle at nearby Treasure Island or visit the canals at The Venetian.

Dining deals

Vegas’ dining options run the gamut from buffets to fast-food establishments to five-star restaurants with celebrity chefs. Best bets for affordable yet tasty cuisine include Capriotti’s, a cozy sandwich shop with fresh roasted meats and other high-quality ingredients. Pasta Mia West, an Italian restaurant, serves up salads, pasta and meat entrees, while Garduno’s of Mexico at Fiesta Rancho offers fajitas, seafood dishes, tableside guacamole and a fresh salsa bar.

Shows

Shows, too, need not set you back too far. SPREE attendees qualify for a 15% discount to the Lion King show at Mandalay Bay. To find out more visit www.SPREEShow.com.

There are several free shows in town. The Fountains at Bellagio incorporate music and lights and can also be observed from the hotel/casino’s strategically located restaurants.

For hotel specials, visit cheapvegas.com and be sure to check out destinationcoupons.com to download coupons for various restaurants, shows and attractions.

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