20.15 Restrictions on Foreign Conventions and Cruises

You may not deduct expenses at a foreign convention outside the North American area unless you satisfy the deduction rules (20.12) and also can show the convention is directly related to your business and it was as reasonable for the meeting to be held outside the North American area as within it.

Apart from the United States, the North American area includes Mexico, Canada, Puerto Rico, U.S. Virgin Islands, American Samoa, Northern Mariana Islands, Guam, Marshall Islands, Micronesia, Palau and U.S. island possessions.

Conventions may also be held in eligible Caribbean countries that agree to exchange certain data with the U.S. and do not discriminate against conventions held in the United States. Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Costa Rica, Dominica, Dominican Republic, Grenada, Guyana, Honduras, Jamaica, Netherlands Antilles, Panama, and Trinidad and Tobago have qualified and are considered to be within the North American area.

Check with the convention operator about whether the country in which your convention is being held has qualified.

Limited cruise ship deduction.

Up to $2,000 a year is allowed for attending cruise ship conventions if all the ports of call are in the U.S. or U.S. possessions and if the ship is registered in the United States. A deduction is allowed only if you attach to your return statements signed by you and by an officer of the convention sponsor that detail the daily schedule of business activities, the number of hours you attended these activities, and the total days of the trip. Do not confuse the $2,000 limitation with the per diem limitation for cruise ship costs (20.5). The per diem limitation does not apply to cruises that meet the tests for the up-to-$2,000 deduction.