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April 17, 2011

Tax File Memorandum

From Terry Rogers

Subject: Mark’s Entitlement for Meal Deduction

Today I spoke with Mark, who is the captain of a ferry boat that carries tourist on roundtrips from Seattle to Victoria back and forth. He came to my office to day with question as to whether he is entitled to take a deduction for the cost of meals incurred during his trip from Seattle to Victoria and back.

Facts: Mark is a Captain on the ferryboat. Each trip last 15 to 17 hours and provides a 6 to 7 hour layover in Victoria before returning back to Seattle. Mark takes a nap on a cot that he has stored in the pilot house of the ferryboat.

Issue: Can a taxpayer claim meal expense deduction if his job travel is considered business related entertainment.

Conclusion: Mark should claim his meal expenses. Mark’s position as a Captain of a ferryboat should fall under the category of taxpayers who qualify for providing entertainment, amusement or recreation to tourist while traveling away from home.

Analysis: Publication 463 (2010) provides that certain entertainment expenses are deductible. Entertainment includes any activity generally considered to provide entertainment, amusement or recreation. Includes guest at nightclubs, sporting events, on yachts, vacation, and similar trips. You can’t claim your expense as an entertainment and a travel expense. You can only claim one or the other. He may also qualify for hours of service limit, in which he can deduct a higher percentage of his meal expense while traveling away form his tax home, if the meals take place during any period over subject to the Department of Transportation’s “ hours of service” limits. The percentage is 80%
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