Posted by Kyle on February 29, 2004 at 12:06:47:
Thanks Very Much Frank,
Are you saying I should attend some other seminars before the convention? Also, should I pay for the trip with my LLC?
Thanks
Vaction Deduction - Posted by Kyle
Posted by Kyle on February 16, 2004 at 17:00:30:
I’m just starting out and about to start my LLC. I will be going to a real estate convention in a couple of months and want to know if that will qualify as a deduction for tax purposes? The convention will be for 3 days and I will be there 4 days.
If it does, can someone tell me what I would need to do, such as: pay for the trip with the business account, keep reciepts, etc?
As you can see, I’m new, so any advice or input to make this work would be much appreciated.
Thanks
Re: Vaction Deduction - Posted by Frank Chin
Posted by Frank Chin on February 17, 2004 at 05:36:20:
Kyle:
I went to the CREONline convention two years ago, and I deducted that off on my taxes. My CPA called it “Professional Development”.
You’ll have to be in the biz by either reporting some income doing flips, rehabs, or rentals. I do rentals, and deducted the trip off on the schedule E.
As to paperwork, I made an “expense report” in Excel, and kept all the receipts, including taxicab fares, airline tickets, hotel bills, meals -EVERYTHING. I used to travel when I was employed, and I kept records the same way my employer did.
I came a day early for the additional seminars, and left the day following the convention. I don’t think the IRS would have a problem with the extra day if it makes your schedule easier.
I had a good time and met many who post on this board.
Frank Chin
Re: Vaction Deduction - Posted by Kyle
Posted by Kyle on February 17, 2004 at 22:25:47:
Frank, I guess I won’t be able to deduct the trip since I’m just now starting up. I haven’t flipped or purchased any properties, yet.
Thanks for your advice!
Re: Vaction Deduction - Posted by Bob
Posted by Bob on February 18, 2004 at 04:54:37:
I’d check the relevant IRS publication, but your seminar may be a startup expense, deductible over 5 years.
Re: Vaction Deduction - Posted by Kyle
Posted by Kyle on February 19, 2004 at 16:09:09:
Thanks for the information! I checked the IRS site, but didn’t come up with an answer. If anyone knows, off the top of their head, please let me know?
Thanks
Further thoughts … - Posted by Frank Chin
Posted by Frank Chin on February 23, 2004 at 07:17:10:
Kyle:
In the same IRS publication 535, page 28, “research and development”, you may find some ground for capitalizing the convention as “R&D”.
R&D pertains to the development of a product, but “product” is defined as coming up with a technique or process.
So, my take is if you take some of the mini seminars prior to the convention, you acquired knowledge of a process or technique or seminar. In other words, you go there to find out whether you should do flips, landlording (techniques) etc., and how to do it (process).
R&D is capitalized over 10 years.
Frank Chin
Re: Vaction Deduction - Posted by Frank Chin
Posted by Frank Chin on February 23, 2004 at 06:59:03:
Kyle:
Read IRS “Publication 535”, page 33, defintion of “Business Startup” expenses. It goes into what you are able to capitalize or not.
If you go thru items allowed, vs items not allowed, the convention cost would go under “research and experimentation”, in my opinion, one of the items NOT allowed. In my reading of the publication, it doens’t fall into any of the categories allowed, IMHO.
Were REI an ongoing business for you, then it would fall under professional development, like going to school.
Otherwise, someone can go to grad school, get an MBA, go into biz, then put it down as a “startup expense”. On the other hand, if you have or set up a business, and have something written up where the company pay for tuition (for an MBA) afterwards, its a different matter.
You might check with a CPA, as these are very technical points.
Frank Chin