If you want to attend a convention, seminar, or similar meeting onboard a cruise ship and deduct all your costs, you face some very special rules. But it can be done.
When you know the tax code rules, you will find an enlightened workaround that removes almost all the hassle and gives you what you want. The IRS considers all ships that sail cruise ships.
1982 Law
In 1982, your lawmakers were attempting to give the U.S. cruise ship industry a leg up by outlawing all cruise ship conventions, seminars, and similar meetings other than those
• that take place on a vessel registered in the United States, and
• for which all ports of call of such vessel are located in the United States or in possessions of the United States.
The 1982 law remains on the books. Lawmakers have not updated the limits for inflation. Here’s the cruise ship convention tax code rule as it existed in 1982 and as it exists today:
With respect to cruises beginning in any calendar year, not more than $2,000 of the expenses attributable to an individual attending one or more meetings may be taken into account under Section 162 . . .”
Had the $2,000 been indexed for inflation, the 2019 amount would be a reasonable $5,431, and that would likely encourage more 2019 U.S. cruise ship convention-type travel.
The $2,000 is pretty skimpy when you consider that the expenses include
• the cost of air or other travel to get to and from the cruise ship port;
• the cost of the cruise; and
• the cost of the convention, seminar, or similar meeting.
Bigger, Better Deductions with Less Hassle
This is a way you can avoid the $2,000 limit, take the cruise you want, and likely deduct all your costs. And this does not have to involve a U.S. ship. Any ship from any country works.
Here’s the strategy. You take the cruise ship to a convention, seminar, or meeting that’s held
• on land, say at a hotel, and
• in the tax-law-defined North American area.
When you meet the two easy requirements above, you deduct (a) first, the full cost of getting to and from the location; (b) second, the full cost of the convention, seminar, or similar meeting; and (c) third, likely the full cost of the cruise if your onboard ship expenses are less than the 2019 daily luxury water limits.
Takeaway
In conclusion, using the 2019 luxury water limits, if your average daily cost of the cruise is $692 or less, you can use this strategy to deduct all cruise ship costs to travel to and from the seminar.
We specialize in helping clients clarify their taxes so they keep more of their money. Many small business owners who come to see us in Fort Worth, TX generally do not understand the tax law enough to explain it to a fifth grader.
If you or someone you know is self-employed or a small business owner, please feel free to contact me by scheduling a call, or by emailing at [email protected].
Tatsiana B. Bender
Bender CPA, PLLC
Fort Worth, TX 76107
[email protected]
Phone: (817) 313-4352
Bender-CPA.com
