did you know - deducting a cruise
Did you know that business trips on cruise ships cannot be deductible if the ship is registered in a country other than the U.S?Last I heard, there were one or two American flag carriers working out of Hawaii, but I could have been wrong. Then I learned that "American Hawaii Cruise lines was the ONLY American-registered cruise ship in the Hawaiian Islands, but they are no longer in business. I do NOT believe there really are ANY American registered cruise ships anymore." I don’t know for sure, but this information may be correct.
If this information is true, how CAN a cruise be legally deductible if the ship is a "foreign" flag carrier? There is a way...
If your business meeting or convention is ASHORE at one of the cruise's port-of-call, instead of aboard the ship, the ship could qualify as your mode of transportation, just like a plane or train.
Since business transportation is 100% deductible, but meals are only 50% deductible, the question is what to deduct when your fare for the cruise is "all-inclusive," covering both transportation AND meals?
The answer is in IRS Pub 463, which states: "If you travel by ocean liner, cruise ship, or other form of 'luxury water transportation' for business purposes, there is a daily limit on the amount you can deduct. The limit is twice the highest federal per diem rate allowable at the time of your travel."
For example, if your cruise ship departs on Jan. 15 and returns 10 days later on Jan 24, and if the highest Per Diem rate anywhere in the U.S. for that time of year is $344, you may deduct up to $688 per day.
So, for the 10-day trip, you could deduct $6,880 OR the actual amount you were charged, whichever is LESS.
You will find a full list of federal Per Diem rates at http://www.gsa.gov/perdiem
Sincerely,
Douglas A. Sevy