Mixing family and business travel expenses

June 2, 2006 8:30 AM

Is this a legitimate business expense?

My husband does freelance web design. My brother-in-law is trying to get him a site redesign gig at his company. My brother-in-law and my sister are coming to visit soon. We're buying the plane tickets. They'll surely spend a lot of time talking business. Would it be legitimate to write off his or both tickets?

posted by leapingsheep to work & money (16 answers total)

IANAAccountant, but that sounds a bit fishy to me. I mean, you might be able to write off your BIL's ticket (though just talking about business could surely be done over the phone), but I don't see how you'd justify writing off your sister's ticket.
posted by cerebus19 at 8:38 AM on June 2, 2006

I'd not risk it. You could make a case that your husband going to visit your b-i-l would be a business expense, because he's going to a potential client site to try to get work. But your b-i-l clearly doesn't have the hiring authority (otherwise presumably your hubby would already have the gig) so what is his business purpose in visiting you? It would be hard to make a case to the IRS if you get audited that his ticket is a business expense. Certainly your sister's is not if she's not involved in the company at all.

That said, you might well not get audited, and the IRS certainly won't blink at a certain level of travel expense.
posted by kindall at 8:42 AM on June 2, 2006

It's stretching it, I know. The thing is, they're still sort of in the wooing phase of this, so do people ever entertain business prospects and their spouses as a couple in such a case?
posted by leapingsheep at 8:44 AM on June 2, 2006

It's true, he doesn't have the hiring authority, but he's the one who deals with this sort of thing at his company, he has a lot of pull in that area, and if they do go forward with the project he would be the contact at the company.
posted by leapingsheep at 8:46 AM on June 2, 2006

It may or may not be legal but it's certainly unethical. The primary reason for the visit is personal and the secondary reason is business.

When in doubt, don't.
posted by ostranenie at 8:47 AM on June 2, 2006

Yeah. I do have the fear of the IRS, that's why I asked. I just didn't know how strict people tend to be about this sort of thing.
posted by leapingsheep at 8:49 AM on June 2, 2006

If you have someone that does your taxes, ask them
posted by edgeways at 9:09 AM on June 2, 2006

If my wife and I were flying out to meet relatives and talk business I would deduct my plan ticket and hotel.

People coming in, probably not, but call an accountant.
posted by Mick at 9:11 AM on June 2, 2006

The business is "wooing" your husband as a freelance web designer? This sounds backwards to me.
posted by bitdamaged at 9:19 AM on June 2, 2006

No, no, we're wooing them. You know, "Come to New York City, see the sights, have some Italian food, now about that web site..." We don't use an accountant...would they just take a phone call from a non customer like that? Like just charge a little fee for a little question or something?
posted by leapingsheep at 9:28 AM on June 2, 2006

It's a grey area. I would definitely write it off if he got the job and definitely not if he didn't. It's certainly defensible if it led to a job that made much more money (and more tax revenue for the IRS), in my opinion.
posted by visual mechanic at 9:42 AM on June 2, 2006

I don't know about it being a business expense, but you can in some cases deduct expenses related to a job search. While I wouldn't expect you could deduct the cost of your sister's ticket, you might get away with your brother in law's ticket.
posted by schoolgirl report at 9:50 AM on June 2, 2006

I am an accountant (in the UK) with Big 4 firm but not a tax expert.

REGARDING BROTHER IN LAW'S TICKET
First off, check the tax laws in your locality (just in case it can be claimed). However, I would say this is not a legitimate business expense.

Also consider this if you do claim: if you get caught (if we consider it to be dubious/illegal) you could get a penalty imposed, you could end up with the tax authorities questioning every expense from there on in for the next while. They could make your life very difficult for what is at most a few thousand dollars. Take local advice, but you're probably best to bite the bullet and pay and not claim.


REGARDING SISTER'S TICKET
Your sister's ticket is not a business expense. In any way. Take the hit. (Claiming this and getting caught will almost certainly bring hassles).
posted by ClanvidHorse at 9:55 AM on June 2, 2006

No. The traveller must either be your husband or someone travelling with your husband for a "bona fide business purpose with reasonable expectation of doing business"

http://www.irs.gov/publications/p463/ch01.html#d0e712
posted by StarForce5 at 10:29 AM on June 2, 2006

Thanks, everyone. Warning accepted! No writeoff. Got it.
posted by leapingsheep at 10:32 AM on June 2, 2006

If your husband and brother-in-law go out for dinner by themselves to talk business, however, it would be fine for him to deduct THAT expense.
posted by desuetude at 12:18 PM on June 2, 2006