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Course Details

Travel, Entertainment, and Auto Rules from a Tax Perspective (Course Id 950)

Updated / QAS / Registry / EA
  Add to Cart 
Author : Danny C Santucci, JD
Course Length : Pages: 0 ||| Review Questions: 0 ||| Final Exam Questions: 120
CPE Credits : 24.0
IRS Credits : 24
Price : $145.95
Passing Score : 70%
Course Type: NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents
Technical Designation: Technical
Primary Subject-Field Of Study:

Taxes - Taxes for Course Id 950

Description :
Updating practitioners on current developments, this core program examines and explains the practical aspects of travel, entertainment, and auto tax deductions. Fundamentals are reviewed and planning opportunities are identified. Creative strategies are discussed and evaluated along with traditional approaches. Taxpayers are once again looking to their tax professionals for guidance and planning related to travel and entertainment expenses. The goal of this course is to understand and solve problems. Participants will learn to master the proper administration of these complex and often cumbersome provisions in a humorous and entertaining format..
Usage Rank : 19474
Release : 2023
Version : 1.0
Prerequisites : General understanding of federal income taxation.
Experience Level : Overview
Additional Contents : Complete, no additional material needed.
Additional Links :
Advance Preparation : None.
Delivery Method : QAS Self Study
Intended Participants : Anyone needing Continuing Professional Education (CPE).
Revision Date : 20-Dec-2023
NASBA Course Declaration : Participants must complete the final examination within one year of purchase and with a minimum passing grade of 70% or better to receive CPE credit unless otherwise noted on the Course History page (i.e. California Ethics must score 90% or better). After logging in click on the Course History links on your My Courses page for the Begin date and Expire date for the Final Exam.
Approved Audience :

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 950

Keywords : Taxes, Travel, Entertainment, Auto, Rules, from, Tax, Perspective, cpe, cpa, online course
Learning Objectives :

As a result of studying each assignment, you should be able to meet the objectives listed below each assignment.

Chapter 1                Travel Expenses

       At the start of Chapter 1, participants should identify the following topics for study:

    * Job hunting travel
    * Travel expenses of investors
    * Transportation expenses
    * Business purpose requirement
    * Circuit Court test for “tax home”
    * IRS test for “tax home”
    * No tax home
    * Two work locations
    * Away from home requirement
    * Temporary & indefinite assignments
Learning Objectives:

       After reading Chapter 1, participants will be able to:
    1. Recognize the importance of travel expenses and determine the difference between transportation and business travel under §162 by identifying types of business travel expenses and requirements of §162, §165, and §195.
    2. Specify deductible travel costs to find a new job, identify investor travel expenses, and determine deductible transportation.
    3. Identify the business purpose requirement, the complications of mixed business and personal travel, and costs at a destination.
    4. Recognize the IRS’s and Circuit Courts’ definition of “tax home,” identify when a taxpayer lacks a tax home, and specify the “away from home” requirement including the sleep and rest rule.
    5. Identify temporary and indefinite job assignments recognizing the critical factor in distinguishing the two job assignments.
Chapter 2                Categories of Business Travel Expense

       At the start of Chapter 2, participants should identify the following topics for study:

    * Domestic business travel primarily for business
    * Point-to-point rules
    * Extended stay or side trip rule
    * Foreign business travel
    * Conventions & meetings
    * Conventions outside the North American area
    * Cruise ship conventions
    * Luxury water travel
    * Spousal & companion travel expenses
    * Aides to sick & handicapped individuals
Learning Objectives:

       After reading Chapter 2, participants will be able to:
    1. Identify the elements of domestic business travel, the 51/49 test, and what costs are deductible.
    2. Specify the “point-to-point” rule for different modes of transportation and which expenses incurred on a business trip with an extended stay or side trip are deductible.
    3. Identify the rules for foreign business travel by:
      a. Recognizing when foreign travel is fully deductible or disallowed, specifying the foreign travel allocation rule, and determining total allowable foreign travel expenses; and
      b. Determining the allocation of expenses incurred in traveling on a foreign side trip and specifying exceptions to the general rule.
    4. Recognize the deduction of convention and meeting expenses based on Reg. §1.162 by:
      a. Specifying factors under the agenda test and how the application of this test determines if a meeting is predominantly business related;
      b. Identifying the availability of the convention and meeting deduction to professional groups, self-employed persons, employees, and the videotaped lecture rule; and
      c. Determining the differences between foreign conventions and foreign travel and citing convention expenses permitted under §274(h)
    5. Determine the rules and limitations on non-north American and cruise ship conventions.
    6. Specify the luxury water travel exception, recognize the companion travel expense limitations, and identify whether expenses for aides to handicapped taxpayers accompanying the taxpayers on business trips are deductible travel expenses.
Chapter 3                Local Transportation

       At the start of Chapter 3, participants should identify the following topics for study:

    * Parking fees
    * Trips to a union hall
    * Commuting & economic hardship
    * Irregular worksite assignments
    * Home office
    * Hauling tools & equipment
    * Transportation between different sites
    * Transportation between different jobs
Learning Objectives:

       After reading Chapter 3, participants will be able to:
    1. Determine what constitutes transportation, local transportation, and commuting, recognize when parking fees are deductible, and specify the effect of the Washburn case on commuting deductions.
    2. Identify the regular/irregular rule, determine a temporary work site under R.R. 90-23, recognize the impact of R.R. 94-47 and R.R. 99-7 on transportation between a taxpayer’s residence and workplace, specify the §280A home office requirements and their impact on business transportation, and identify the hauling tool rule.
Chapter 4                Automobiles

       At the start of Chapter 4, participants should identify the following topics for study:

    * Apportionment of personal & business use
    * Deduction limitations using the actual cost method
    * Expensing - §179
    * Predominate business use rule
    * Auto leasing
    * Standard mileage method
    * Auto trade-in vs. sale
    * Employer-provided automobile
    * Nonpersonal use vehicle
    * Reporting of an employer-provided automobile
Learning Objectives:

       After reading Chapter 4, participants will be able to:
    1. Recognize the apportionment of business and personal use of an automobile by:
      a. Citing accepted methods of making an apportionment; and
      b. Identifying the automobile costs that are generally deductible and nondeductible and their exceptions.
    2. Determine actual cost method expenses, auto depreciation, and §179 expensing by:
      a. Specifying a car for purposes of these provisions, identifying basis for figuring depreciation, and determining when a car is placed in service; and
      b. Identifying depreciation methods and conventions under the modified cost recovery system (MACRS) and citing the depreciation caps that apply to different vehicles.
    3. Recognize auto depreciation "caps" and post-recovery depreciation limits.
    4. Determine the §179 expensing deduction’s relationship to depreciation, its limitations, and when to use it.
    5. Specify the impact of the §280F predominate business use rule on depreciation, excess deductions, and the former investment tax credit.
    6. Determine automobile leasing elements recognizing vehicle purchase differences, specify various leasing terminology including closed-end and open-end, identify monthly lease payments and income inclusion amounts, and cite the leasing deduction restrictions.
    7. Identify the mechanics of the standard mileage method including the ability to switch methods, deduct charitable and medical transportation, and MACRS depreciation limitations.
    8. Recognize the differences between trading and selling a vehicle and the use of employer-provided vehicles as §132 fringe benefits by:
      a. Determining the value of an employee’s personal use of such an automobile under the valuation methods and the exclusion limits for related deductions; and b. Specifying nonpersonal use vehicles, what reporting standards apply, and identify the reporting requirements for employers.
Chapter 5                Entertainment

       At the start of Chapter 5, participants should identify the following topics for study:

    * Definition of entertainment
    * Allocation – business & nonbusiness persons
    * Former directly related test
    * Former associated test
    * Statutory exceptions
    * Quiet business meals & drinks repeal
    * Ticket purchases
    * Percentage reduction for meals & pre-2018 entertainment
    * Entertainment facilities
    * Business gifts
Learning Objectives:

       After reading Chapter 5, participants will be able to:
    1. Determine entertainment using Reg. §1.274 and other related deductible business expenses by:
      a. Recognizing the objective and subjective aspects of entertainment and occasions where entertainment might be reclassified as a gift or travel expense;
      b. Identifying the pre-2018 stepped process of determining qualifying allowable entertainment expenses and the former allocation and proration entertainment expenses including meals; and
      c. Specifying the elements of the ordinary and necessary requirement under §162.
    2. Identify the pre-2018 deductible entertainment tests of §274 by:
      a. Specifying the conditions of the former “directly related” test and examples of clear business settings that were presumed to meet the test;
      b. Determining the meaning of the former “associated with” test in finding whether expenses have a business purpose;
      c. Identify former deductible home entertainment expenses, determine the prior limits on ticket purchases, and cite provisions under which goodwill entertainment was previously deductible, and
      d. Specify the remaining statutory exceptions to §274 identifying the repealed exception.
    3. Recognize the 50% reduction for meals and pre-2018 entertainment and related expenses including exceptions, determine what constitutes an entertainment facility specifying excluded facilities types and costs, and recognize the effect of OBRA ’93 on club dues.
    4. Identify the tax benefits and substantiation requirements for business gifts, employee achievement awards, and sales incentive awards by:
      a. Specifying the business gift dollar limitation and the incidental cost gift exclusion;
      b. Recognizing the tax treatment of joint spousal gifts and exclusions to the annual limitation; and
      c. Citing conditions that must be met for costs from a §74 qualified plan award program to be deductible.
Chapter 6                Substantiation

       At the start of Chapter 6, participants should identify the following topics for study:

    * Elements to be substantiated
    * Separate expenses
    * Adequate records method of substantiation
    * Sufficiently corroborated statements method of substantiation
    * Exceptional circumstances method of substantiation
    * Written policy statements
    * Treating vehicle as 100% personal
    * Exempt vehicles
    * Farming vehicles
    * Additional information requirements
Learning Objectives:

       After reading Chapter 6, participants will be able to:
    1. Identify expense categories subject to the detailed substantiation requirements of §274(d) and the exceptions to these requirements, and specify elements to be proven and which elements must be proven for the expense type.
    2. Cite ways to substantiate travel and pre-2018 entertainment expenses using required records by:
      a. Specifying when record entries must be made;
      b. Selecting a sampling of the use of listed property for portions of a taxable year; and
      c. Identifying documentary evidence.
    3. Recognize the sufficiently corroborated statements method of substantiation including when this method can be used, and determine methods that can be used to substantiate the requisite elements of listed property expenditures and how long records should be retained.
Chapter 7                Reporting & Reimbursement of T&E Expenses

       At the start of Chapter 7, participants should identify the following topics for study:

    * Employees
    * Accountable plans
    * Adequate accounting
    * Non-accountable plans
    * Self-employed persons
    * Meal & pre-2018 entertainment expenses for self-employed
    * When an employer can deduct expenses
    * Meals and employer-provided autos
    * Disclosure of business use of automobiles
    * Disclosure of business use of other listed property
Learning Objectives:

       After reading Chapter 7, participants will be able to:
    1. Identify whether an employee must file Form 2106, determine the substantiation requirements of TRA ‘86 and Family Support Act 1988, and specify the requirements for an accountable plan and “reasonable period of time” safe harbors.
    2. Determine how to adequately account for travel and other employee business expenses by:
      a. Specifying federal per diem rate methods and whether an employer is related to an employee to decide which per diem rate may be used;
      b. Identifying incidental expenses under R.R. 2002-63 for accounting purposes and specifying the meal break out and 50% limitation; and
      c. Recognizing accountable plans and nonaccountable plans and their correct reporting of employee reimbursements.
    3. Determine how to report income and expenses with or without adequate accounting, specify the differences between entertainment and non-entertainment expenses incurred by an independent contractor, identify whether an employer can take deductions for reimbursed travel, meals, and/or business gifts, and determine how to make appropriate disclosures on tax returns of required information.
Course Contents :

Chapter 1 - Travel Expenses

Transportation and Travel Distinguished

Travel Expenses

Deductible Travel Expense Examples

New Business Travel - §165 & §195

Job Hunting Travel

Itemized Deduction & AGI Suspended Limit - §67

Transportation & Travel Exception - §62


Outplacement Services Exclusion

Travel Expenses of Investors - §212

Two Percent Limitation - §67

Investment Seminar Travel Limitation - §274(h)(7)

Travel Related to Rent or Royalty Producing Property

Travel to Search for New Property - Capitalization

Transportation Expenses

Business Purpose Requirement

Solely for Business

Mixed Business & Personal

Travel Costs

All or Nothing for Travel Costs

Costs at Destination

Business Relationship

Definition of “Tax Home”

Circuit Court Test

Rosenspan Case - 2nd Circuit

Harvey Case - 9th Circuit

IRS Test


Stidger Case

Tax Home Area

No Tax Home

Regular Place of Abode

Itinerant Worker

Two Work Locations

“Principal” Factors

Away From Home Requirement

Sleep & Rest Rule

Substantial Period

Correll Case

Temporary & Indefinite Assignments

Time - The Critical Factor

Prior Law Presumptions

One Year or More IRS Presumption

Less than Two-Year Exception

Regular Home

Temporary Job That Became Permanent

Current Law - One-Year Rigid Time Rule

R.R. 93-86 - The Flexible Rigid Rule?

Return Trips from Temporary Assignment - Homesick Rule

Family Presence Shows Indefinite Assignment

Probationary Job - Always Indefinite

Armed Forces Member

Chapter 2 - Categories of Business Travel Expense

Domestic Business Travel

Primarily For Business


51/49 Percent Test

Point-To-Point Rules

Public Transportation - Scheduled Stop Method

Private Car - Any Travel within U.S. Method

Private Plane - Take Off to Landing Method

Extended Stay or Side Trip Rule

Foreign Business Travel

All Business Foreign Travel - Full Deduction

Primarily Personal Foreign Travel - No Travel Deduction

Primarily Business Foreign Travel - Allocation Rule

Allocation Formula

Foreign Enroute Personal Activity Limitation

Foreign Side Trip Allocation

Exception to General Allocation Rule - Full Deduction

Conventions & Meetings

Agenda Test - Predominant Business Relationship

Videotaped Lectures


Conventions outside the North American Area

Reasonableness Factors

Definition of North American Area

Beneficiary Country

Current Beneficiary Countries in the North American Area

Allowable Expenses

Cruise Ship Conventions

Deduction Limitation

Reporting Statements

Luxury Water Travel

Meals & Entertainment Separately Stated

Exceptions to Luxury Water Travel Limitations

Spousal & Companion Travel Expenses - §274(m)

Additional Cost Rule

Employee Exclusion of Spousal Travel Reimbursements - §132

Aides to Sick and Handicapped Individuals

Direct Deduction

Chapter 3 - Local Transportation


Parking Fees

Trips to Union Hall

Commuting & Economic Hardship

Irregular Work Site Assignments

R.R. 90-23 & the Regular/Irregular Rule

Temporary Work Site Definition

Reserve Units

R.R. 94-47 & Walker Case

Revenue Ruling 99-7

Home Office

Principal Place of Business Requirement

Hauling Tools & Equipment

Same Mode Exception


Transportation between Two Jobs

Different Sites

Different Jobs

Chapter 4 - Automobiles

Apportionment of Personal & Business Use

Car Pool


Parking Fees

Interest Deduction Limit for Individuals

Self-Employed Exception

Property Taxes

Sales Taxes

Sales Tax Deduction for Qualified Vehicles (Expired) - §164

Actual Cost Method

Deduction Limitations

Definition of Car

Depreciation and Expensing


Trade-In of Old Car for New

Placed in Service

Conversion to Business Use - “Lesser of” Rule

MACRS - 5 (Actually 6) Years

200%Double Declining Balance Method

150% Declining Balance Method Election

Straight-Line Method Election

Half-Year Convention

Mid-Quarter Convention

Depreciation “Caps” - §280F(a)

Passenger Auto Depreciation Safe Harbor Method - R.P. 2019-13

No Separate Depreciation Caps for Trucks & Vans

Post-Recovery Period Depreciation - Max Reduction Rule

Partial Business Use


Bonus (or Additional First-year) Depreciation - §168(k)

Expensing - §179

Cost of Car

Basis Reduction

Making the §179 Election

Business Use Reduction

SUV Limitation

Predominate Business (More Than 50%) Use Rule

Qualified Business Use


Change From Personal to Business Use

Employee Use of Their Own Car

Failure to Meet Predominate Business Use Rule

Later Reduction in Qualified Use

ITC Recapture - Highly Unlikely

Straight-line Depreciation

Excess Depreciation Recapture

Short Tax Year Depreciation Reduction

Auto Leasing

Pros & Cons

Leasing Terminology

Closed-End vs. Open-End Lease

Formula for Monthly Payments

Leasing Deduction Restrictions

Income Inclusion Amount

Separate Lease Inclusion Table for Trucks & Vans

Cars Leased For 30 Days or More After 1986

Computation of Inclusion

Nine-Month Following Year Rule

Buying v. Leasing

Standard Mileage Method

Limitations on Standard Mileage Method

Use, Ownership & Prior Depreciation

Switching Methods

Charitable Transportation

Medical Transportation

Auto Trade-In vs. Sale

Working Condition Fringe Benefits

Qualified Transportation - §132(f)

Exclusion Limits

Employer-Provided Automobile

General Hypothetical Valuation Method

Special Method #1 - Lease Value

Annual Lease Value - For Entire Calendar Year

Fair Market Value

Safe Harbor Value

Items Included in Annual Lease Value Table

Prorated Annual Lease Value - For 30 Days or More

Daily Lease Value - For Less Than 30 Days

Optional Fleet-Average Valuation Rule (FAVR)

Special Method #2 - Cents per Mile

Regular Use - 50% Business

Mileage Rule - 10,000 Miles

Items Included In Cents-Per-Mile Rate

Special Method #3 - Commuting Value

Control Employee

Employer-Provided Transportation in Unsafe Areas

Qualified Employee

Nonpersonal Use Vehicles - 100% Excludable

Clearly Marked Police or Fire Vehicles

Unmarked Law Enforcement Vehicles

Law Enforcement Officer

Trucks & Vans

Pickup Truck Guidelines

Van Guidelines

Qualified Automobile Demonstration Use

Full-time Automobile Salesperson

Restrictions on Personal Use

Reporting by Employer

Election Not to Withhold for Income Taxes

Value Reported

Accounting Period

Special Accounting Period - Pour Over Method

Chapter 5 - Entertainment

2018 General Entertainment Deduction Repeal

Final Entertainment Repeal Regulations - TD 9925

Entertainment Definition Maintained

Meals at or During Disallowed Entertainment

Business Meals

Travel Meals

Repeal of Directly Related & Associated With Tests Confirmed

Statutory Exceptions of §274(e) Continue

Pre-2018 Entertainment - What's Gone


Objective Test with Subjective Considerations

Entertainment Presumption on “Close Calls”

Gift Exception

Travel Facility Exception

Meals as Entertainment

No Double Deduction

Allocation - Business & Nonbusiness Persons


Former Four-Step Deduction Process

Step #1: Ordinary & Necessary Requirements - §162

Step #2: Three Tests of §274

Former Directly Related Test

Clear Business Setting Presumption

Services Performed & Prizes Presumption

Former Associated Test

Expenses for Closely Connected Persons & Spouses

Substantial Business Discussion


Meetings at Conventions

Former & Current Statutory Exceptions Tests

Miscellaneous Former Entertainment Provisions

Quiet Business Meals & Drinks

Home Entertainment Expenses

Ticket Purchases - Face Value Limit

Exception for Charitable Sports Events

Special Limitation for Skyboxes

One Event Rule

Related Parties

Food & Beverages Separately Stated

Goodwill Entertaining

Employee Business Expenses

Post-2018 Entertainment - What's Left

Statutory Exceptions - §274(e)

Food and Beverages for Employees - §274(e)(1)

Deductions Eliminated for Some Meals After 2015

Expenses Treated as Compensation - §274(e)(2)

Reimbursed Expenses - §274(e)(3)

Recreational Expenses for Employees - §274(e)(4)

Definition of Highly Compensated Employee

Employee, Stockholder and Business Meetings - §274(e)(5)

Trade Association Meetings - §274(e)(6)

Items Available to Public - §274(e)(7)

Entertainment Sold to Customers - §274(e)(8)

Expenses Includible in Income of Non-employees - §274(e)(9)

Temporary 100% Deduction for Meals & Beverages - §274(n)(2)(D)

Notice 2021-63

Lavish or Extravagant Restriction

Ordinary & Necessary Requirement

Business Meals Deduction - §274

Percentage Reduction for Meals - §274(n)(1)

Related Expenses

Application of Reduction Rule

Exceptions to Percentage Reduction

Entertainment Facilities

What is an Entertainment Facility?

What Isn’t an Entertainment Facility?

Covered Expenses

Country, Social, Athletic, and Sporting Clubs

50% Test

Days of Business Use

Membership Fees & Dues Disallowed - §274(a)(3)


Club Definition - Principal Purpose Test

Exceptions to §274(a)(3) Dues Disallowance

Club Dues as Possible Working Condition Fringe

Disposition of an Entertainment Facility

Professional Organizations and Luncheon Clubs

Business Gifts - §274(b) & §102

Incidental Costs Excludable

Partnership & Joint Returns


Employee Achievement Awards - §274(j)

Qualified Plan

Sales Incentive Awards

Chapter 6 - Substantiation

Detailed Substantiation Categories

Exceptions to Substantiation Requirements

Elements to Be Substantiated

Travel Expense Substantiation

Meal Expense Substantiation

Additional Club & Entertainment Facility Requirements Repealed

Business Gifts Expense Substantiation

Listed Property Expense Substantiation

Separate Expenses


Repetitious Expenses

Substantiation Methods

Adequate Records - Method #1

Timing of Record Entries


Documentary Evidence

Canceled Check or Charge Slip

Account Statement

Business Purpose

Employee Expense Statements

When is Documentary Evidence Required?

Sufficiently Corroborated Statements - Method #2

Direct Evidence Requirement

Exceptional Circumstances

Destroyed Records

Special Substantiation for Listed Property

Special Method #1: Written Policy Statements

No Personal Use Policy

No Personal Use Except for Commuting

Special Method #2: Treating Vehicle as 100% Personal

Special Method #3: Exempt Vehicles

Pickup Trucks & Vans

Special Method #4: Farming Vehicles - 75% Presumption

Additional Information Requirements

Retention of Records

Chapter 7 - Reporting & Reimbursement of T&E  Expenses


Form 2106 Restricted

Employee Expense Reimbursement & Reporting

TRA '86 - Unreimbursed Expenses Become Itemized Deductions

Family Support Act - Reimbursement Without Accounting Is Income

Accountable Plans

Reasonable Period of Time

Fixed Date Safe Harbor - #1

Period Statement Safe Harbor - #2

Adequate Accounting

Per Diem Allowance Arrangements

Federal Per Diem Rate

Related Employer Restriction

Reporting Per Diem Allowances

Reimbursement Not More Than Federal Rate

Reimbursement More Than Federal Rate

Nonaccountable Plans

Self-Employed Persons

Expenses Related to Taxpayer's Business

Reimbursed Expenses Incurred on Behalf of a Client

With Adequate Accounting

Without Adequate Accounting


When Can an Expense Be Deducted?

Economic Performance Rule

Nondeductible Meals

Employer-Provided Auto

Disclosures Required on Tax Returns

Business Use of Automobiles

Business Use of Other Listed Property



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