Who Knew: Cruise Ship Convention

Travel expenses incurred in attending a domestic convention are subject to the regular business trip rules if attendance will benefit or advance the taxpayer’s business. No business expense deduction is allowed for expenses allocable to a convention, seminar, or similar meeting held outside the “North American area” unless the taxpayer establishes that the meeting is directly related to the active conduct of his trade or business, or to an activity relating to the production of income, and that after taking specified factors into account, it’s as reasonable for the meeting to be held outside the North American area as within it.

North American area means the U.S., its possessions, the Trust Territory of the Pacific Islands, Canada and Mexico. U.S. possessions include Puerto Rico and the U.S. Virgin Islands. “North American area” also includes Aruba, Antigua, Bahamas, Barbados, Barbuda, Bermuda, Costa Rica, Curacao, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Jamaica, the Netherlands Antilles, Panama, Saint Lucia, Trinidad and Tobago. Saint Maarten and the Caribbean part of the Netherlands were included through June 27, 2016.

For business conventions held aboard a cruise ship, there is a $2,000 per-individual, per-year deduction allowed, but only if the ship is registered in the U.S. and all ports of call of the cruise ship are located in the U.S. or its possessions