Business Travel - Tax Deduction

6 Replies

Hi BP, I am curious to know what proof do I need to travel to Utah (from Oregon) to check up on a rental property for the IRS audit of my business trips? I could possibly save down pictures of my texts with the tenants, notifying them I am coming... However, I do want to do drive-by's without them knowing I am in town? Does having a rental property in Utah qualify for a business purpose without needing any evidence?

@Spencer Stevens

What @Daniel Hyman said, plus some common sense. If you're from Utah, and your family is there, and your tenant is your sister... You know what I mean. Interstate travel is not cheap, so the trip should make business sense.

As to proof of business purpose, the general principle when it comes to IRS audits is - the more the better. Should they challenge you, even such trivial items like texts with your tenants could come handy. Save them. In some of my audits, I had to  use such unusual items as framed photographs, greeting cards and wall calendars. You never know.

The new Bigger Pockets Book on Tax Saving Strategies was an entertaining read ironically.

They stated in there that in order to write off business travel you just need to have predetermined planning documented somehow in your email or even texts probably. For example an email to your property management company dated pre-departure or something.

Another thing that the book stated was that the IRS tax code uses the words "ordinary" and "necessary" for expense write offs. 

It sounds like you are taking all of the necessary actions. In the event you ever got audited you could probably even show this post as evidence.

Originally posted by @Nathan P. :

The new Bigger Pockets Book on Tax Saving Strategies was an entertaining read ironically.

They stated in there that in order to write off business travel you just need to have predetermined planning documented somehow in your email or even texts probably. For example an email to your property management company dated pre-departure or something.

That is not the correct interpretation of what the book said. 

@Michael Plaks would you mind expanding on your criticism? 

Just because I am not an accountant does not mean I am providing bad advice in fact my comment correllated with a few things you mentioned as well.

It's very simple, @Nathan P.

To write off business travel, you need to have a legitimate business purpose and matching itinerary, as opposed to a personal trip / vacation. With smart planning, you can mix the two and still protect the "primarily business" purpose of the trip, as the book explains.

Advance emails/texts do not make a trip deductible if it was not deductible otherwise. They simply provide additional ammunition should your position be challenged by the IRS.

In your interpretation, it sounds like manufacturing bogus emails discussing business can make a personal trip deductible. It cannot, and the book does not suggest so. Unfortunately, this is exactly what a lot of investors are attempting to do.

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