How to prove a trip is for investing

Question

I am heading out on a 4 day trip to 3 different cities to look at investment options. What type of documenatation do I need to prove this for write off purposes? Do I need to meet with someone In every city?

Eamonn McElroy · Answer

@Ryan Thomas

Retain receipts, maintain a log (who, what, when, where).

Doing the above doesn't necessarily mean the trip is 100% business, but will help substantiate the parts that were business.

Also, it's very possible some of these expenses will have to be capitalized and won't be able to be "written off".

Nathan Gesner · Answer

The trip doesn't have to be "100% business" to qualify. Your "primary purpose" of the trip must be for business and the "majority of time" must be spent on business.

If you book a trip to Disneyland and then decide to look at rentals while you are there, that won't count. If you go to Orlando to look at rentals and tie in a trip to Disneyland then that would work. How you define the difference  is the amount of time spent on each activity.

If you go to Orland for seven days, four of them should be focused on business and only three on leisure. I don't know if there is a defined number of hours you have to work each day but let's just assume you should probably spend at least 4-6 hours per day on "business" items. I would keep a log of what you did, people you met with, receipts, etc.

Here's an example of how you can work two days and write off an entire week. Let's say it's Labor Day weekend so businesses are generally closed for three days. You fly in on Thursday, get the family set up, and then spend Friday on a few meetings and confirming your schedule for the following week. You spend Saturday - Monday having fun, do business on Tuesday and fly back on Wednesday. The entire trip is a business trip even though you only worked two days.

Carl Fischer · Answer

@Ryan Thomas

Documentation, documentation, documentation! Always think what a judge or jury thinks of your evidence and testimony. Irs chases paper trails.

Michael Tal · Answer

That's a hard one, I can't imagine asking realtors to provide you evidence that you've been to viewings with them. Perhaps you could list the realtors that you've visited during these 4 days; it's unlikely that they'll give them a call anyway to confirm what you have claimed.

How to prove a trip is for investing

Most Popular Reply