On a business trip abroad, you may deduct your travel expenses (the 50% limit applies for meals), even though you take time out to vacation, provided you can prove: (1) the primary purpose of the trip was business and (2) you did not have control over the assignment of the trip.
Fixing the date of the trip does not mean that you had control over the assignment. IRS regulations assume that when you travel for your company under a reimbursement or allowance arrangement, you do not control the trip arrangements, provided also that you are not: (1) a managing executive of the company; (2) related to your employer (20.4); or (3) have more than a 10% stock interest in the company. You are considered a managing executive if you are authorized without effective veto procedures to decide on the necessity of the trip. You are related to your employer if the employer is your spouse, parent, child, brother, sister, grandparent, or grandchild.
If you are a managing executive, self-employed, related to your employer, or have a more-than-10% stock interest, your deduction for transportation costs to and from your business destination may be limited. However, a full deduction for transportation costs is allowed if:
If the vacationing and other personal activities took up 25% or more of your time on a trip lasting more than one week, and you cannot prove that the vacation was a minor consideration in planning the trip, you must allocate travel expenses between the time spent on business and that spent on personal affairs. The part allocated to business is deductible; the balance is not. To allocate, count the number of days spent on the trip outside the United States, including the day you leave the U.S. and the day you return. Then divide this total into the number of days on which you had business activities; include days of travel to and from a business destination.
If you vacation at, near, or beyond the city in which you do business, the expense subject to allocation is the cost of travel from the place of departure to the business destination and back. For example, you travel from New York to London on business and then vacation in Paris before returning to New York. The expense subject to allocation is the cost of traveling from New York to London and back; see Example 2 below. However, if from London you vacationed in Dublin before returning to New York, you would allocate the round-trip fare between New York and Dublin and also deduct the difference between that round-trip fare and the fare between New York and London; see Example 3 below.
If you have business meetings scheduled before and after a weekend or holiday, the days in between the meetings are treated as days spent on business for purposes of the 25% business test discussed above. This is true although you spend the days for sightseeing or other personal travel. A similar rule applies if you have business meetings on Friday and the next scheduled meeting is the following Tuesday; Saturday through Monday are treated as business days. If your trip is extended over a weekend to take advantage of reduced airfares, the additional expense of meals, lodging, and other incidental expenses is deductible (20.10).
3.133.124.21