On With The Show
Shooting sports businesses can write off expenses incurred when attending a trade show, seminar, or convention. But you need to follow guidelines set by the Internal Revenue Service.
By Mark E. Battersby
They’re back! That’s right, acquiring knowledge, having fun, and reaping the many benefits of attending events such as the annual SHOT Show, the NRA’s annual Meeting and Exhibits, or one of the many NICS Retailer events are once again possible. While not all conventions, trade shows, seminars, and events are “in person,” tax write-offs—and restrictions—new and old are in place for those attending or participating in either.
Not too surprisingly, the tax rules have changed, and there are new write-offs strictly for those attending remote events, seminars, and the like. A new, temporary write-off for 100 percent of some food and beverage costs, new per diem rates, and a recently increased standard mileage rate are just a few of the things a shooting sports retailer faces today.
Deducting Travel
Generally, a shooting sports business or an independent, self-employed sales representative can deduct ordinary and necessary expenses incurred when traveling on business. Meeting the requirement of being “ordinary and necessary” business expenses, and if the trip is completely business-related, the full cost is deductible including travel by plane, car, bus, or train between the attendee’s home and the destination; transportation at the destination, including from the airport to the hotel, the hotel to the event, and even the cost of a car rental; actual or standard mileage costs of using a personal or business vehicle for the trip; parking, tolls, and other costs associated with the use of the vehicle; lodging; meals (either the actual cost or the IRS’s per diem allowance); dry cleaning or laundry services; tips related to any of the above.
Today, and at least until 2026, employee business expenses cannot be taken as a personal itemized deduction. The shooting sports business, along with the self-employed and independent contractors can, of course, continue reaping tax savings when attending events in-person or remotely.
The expenses outlined above can be deducted by the business for owners and employees attending a convention or trade show within the United States, so long as it can be shown that attendance benefited the business. This applies to workshops, conferences, and seminars as well as to actual trade shows and conventions.
However, while travel expenses are among the most common business expense deductions, this type of expense can also be one of the most confusing. Fortunately, things can go a lot smoother when using the IRS’s standard expense deduction.
Per Diem
The IRS’s per diem rules greatly simplify the process of substantiating business travel expenses. Originally designed for federal employees, the per diem is a daily allowance for specific travel expenses that can be used by private employers and is accepted by the IRS.
While the per diem amount does not cover the transportation to out-of-town events or other business destinations, it does cover lodging, along with meals and incidentals, once an attendee arrives at the event.
Updated every year, the per diem rates change as cost rise. The per diem rates include three components. Meals and incidental expenses (M&IE) “high/low” rates are $296 for travel to any high-cost locality and $242 for travel to any other locality in the continental United States. The amount of the high rate treated as paid for meals is $74, $64 in any other locality. Incidental expenses only cover such things as fees, tips, and the like and remains at $5 per day. High cost cities and locations covers the cost when business requires visiting a more expensive destination.
Friends and Family
Generally, there is no tax deduction for a spouse, dependent, or any other individual traveling with an attendee. In order for their travel expenses to be deductible, the spouse or other individual must also be an employee of the business and it must be for a bona fide business purpose.
Although not deductible, those accompanying spouses, family members, or friends can stay in accommodations that are priced “per room” without jeopardizing the attendee’s deduction. When driving, rarely does an extra passenger add to the expense.
Too Much Fun?
When it comes to travel that is both business-related and personal, the IRS frowns at anyone trying to classify a nondeductible personal trip as a deductible business trip. Fortunately, convention-related expense deductions have long been possible even if part of the trip included personal vacation time.
Traveling to a destination and engaging in both personal and business activities means deducting traveling expenses to and from the destination only if the trip is primarily related to the shooting sports business.
If the trip is primarily personal in nature, none of the traveling expenses are deductible. This is true even if some business activities are engaged in while at the destination. Naturally, deductions are permitted for particular expenses incurred while at the destination if they otherwise qualify as business deductions.
Foreign Travel
Foreign travel solely for business is fully tax deductible. When it comes to deducting expenses for attending a trade show or convention outside the North American area, however, the event must be directly related to the shooting sports business and it must be as reasonable to hold the event outside the North American area as in it.
Remote Rules
As a result of the pandemic, many trade shows, conventions, and other events were forced to operate virtually. Today, attendance for many of those events is optional.
While many remote events and webinars, such as those sponsored by the NSSF are free, there are often other expenses involved. In order to reimburse workers for both the expense of attending “in-person” events and expenses related to participation in remote events, a shooting sports business can establish an IRS-approved reimbursement program. These so-called “accountable plans” cover the expense of attending or participating in remote events—so long as they are business-related.
Employees provide receipts for their expenditures and the business pays them back and qualifies the reimbursement as a business expense. These reimbursements would be for reasonable and necessary expenses, which might even include a portion of the expenses associated with participating in remote events such as cell phone or landline plan, personal computer or tablet, home internet plan, and teleconferencing software or hardware.
Obviously, only briefly attending a remote show, webinar, or other event would make allocating costs extremely difficult for anyone not already working remotely. For those individuals, deducting “education-related” expenses might be a better alternative.
The requirements for education-related expenses are that the event, webinar, or seminar must improve a taxpayer’s skills or help maintain their professional expertise. In addition, they must be related to the individual’s field of work.
The Importance of Records
Attending a show or other industry event can mean big bills for travel and hotels. A shooting sports retailer can, of course, deduct those expenses, softening the blow to the bottom line. However, deductions must be supported by adequate documentation.
The IRS frequently challenges deductions for travel expenses that are not properly substantiated. Therefore, it’s important to keep “adequate” records that show the amount of the expense, the time and place of the activity, and the business purpose and relationship.
That means retaining materials such as show badges or seminar workbooks that can help prove attendance at the event. Other helpful materials would be conference agendas with business-essential sessions, an exhibitors list, a catalogue of relevant seminars, and business cards and vendor brochures.
Although not required to keep all receipts, such as those for expenditures under $75, it doesn’t hurt to do so. They often serve as a reminder of a deductible expense, especially where the payment was in cash.
Summing Up
Attending trade shows, conventions, conferences, and other events can be a great way for business owners and self-employed individuals to keep themselves and their employees current on industry developments, ensure ongoing professional development, and improve skills. Doing so also allows for networking opportunities. Best of all, the costs of attending or participating in these events may be tax deductible.
Naturally, deducting show attendance costs that are lavish or extravagant is a no-no. And showing the business purpose of these or any other expense is needed to secure the deduction. The complexity and ever-changing rules make professional guidance necessary for those wishing to secure the maximum write-off for their shooting sports business.
