Annual S Corp Meeting

Today TaxMama hears from Alyx in the TaxQuips Forum who is creative. “If you have a wife and husband S corporation, how can you write off an 8-day Caribbean cruise as a business expense for an annual meeting?  Is it true that if you have the meeting on one of the ports of call you can use the cruise ship as a means of transportation to and from the destination in which you hold your annual meeting?” She has a couple of other questions, too.

Dear Alyx,

Don’t go there.

It won’t fly…or cruise.

True, the IRS considers the U.S. Virgin Islands domestic travel (at least for their investigators). But…use logic.

IRS WILL treat it as an abusive expense if the ONLY purpose for this meeting or cruise is for a husband and wife, who already live together, to meet someplace exotic to discuss business.

Want a nice meeting/vacation?  Do it someplace nearby in your own area that’s upscale and would provide privacy for a few days. If you want the DEDUCTIBLE meeting to last a week, you would be wise to have an agenda and schedule of things to be discussed, and MINUTES, to cover each day of that week. It could turn into a very productive and profitable week!

Read the general rules for bona fide business travel.

Incidentally, if I wanted to take trips or cruises like this as deductible business travel, it would not be for a husband-wife S corp board meeting. It would be tied to meeting with bona fide clients or vendors (who are not located in your own vicinity), or classes, workshops or trade shows. You can set them up yourself.

 And remember, you can find answers to all kinds of questions about deducting your vacations, other tax issues, free. Where? Where else? At www.TaxMama.com.

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2 thoughts on “Annual S Corp Meeting

  1. Jim Multerer says:

    And you wonder why taxpayers are so mad about the tax code. Talk about gaming the system. The whole tax scam should be scrapped and start over. No deductions unless they are labor related or become part of a finished product (sub-assemblies). Fancy car? No deduction. Fancy office? No deduction. Trips & meals? No deduction.

    I would like these people try to write-off their ‘vacation’ and have the IRS slam them with penalties.

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