Final Regs give Local Lodging Safe Harbor

[Lee B]

From The Journal of Accountancy

 

Under the safe harbor, local lodging expenses will be treated as an ordinary and necessary business expense if:

• The lodging is necessary for the employee to participate fully in or be available for a bona fide business expense if:
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• The lodging is necessary for the employee to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function;
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• The lodging does not exceed five calendar days and does not occur more than once each calendar quarter;
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• The employer requires the employee to remain at the activity or function overnight; and
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• The lodging is not extravagant or lavish and does not provide a significant element of personal pleasure.

In response to a comment, the final regulations clarify that expenses that do not qualify for the Regs. Sec. 1.162-32(b ) safe harbor may nevertheless be deductible under the facts-and-circumstances test.

 

Taxpayers may apply the new rules to any tax year that is still open