WorldWide Drilling Resource

Drilling Into Money Not Boring by Mark E. Battersby Tax Write-Offs for Show Attendance after TCJA Industry events, such as July’s South Atlantic JUBILEE or the National Drilling Association Convention in September, are a good way to gain know-how, find new suppliers, and network with others in the industry. Best of all, Uncle Sam, in the form of our tax laws, is willing to pickup the expense of attending - at least for some. Unfortunately, many deductions for show attendance - previously claimed on the personal tax returns of attendees - were temporarily suspended by last December’s Tax Cuts and Jobs Act (TCJA), the same bill which put a bigger crimp in the meals and entertainment deductions. The TCJA eliminated, at least until 2026, the deductibility of miscellaneous itemized deductions subject to the former 2% floor. This means unreimbursed employee expenses (including expenses for travel, lodging, meals, entertainment, continuing education, and others) can no longer be claimed on an individual’s tax return. Many deductions for show attendance appear to have been wiped out by the TCJA, yet some remain - at least for drilling businesses - including sole proprietors. If, for example, business is conducted during a meal, a deduction may be available - although limited to 50% of the cost of the meal. Although the tax laws require a 50% reduction in the allowable business meal deduction, not too surprisingly, the rules also contain quite a few gray areas. If, for instance, the business foots the bill to take employees to a conference, the full amount of their meals is deductible by the drilling business. The 50% rule applies only to the business owner. If, on the other hand, a meal immediately precedes or follows a substantial business meeting, 50% of the cost associated with entertainment can be deducted - so long as the entertainment is not “lavish or extravagant.” If a supplier provides meals in a hospitality suite at a convention with the clear intent of generating business, the cost is deductible. Other meals, which are purely for goodwill purposes, don’t qualify as directly related to either the supplier or drilling business. Under the TCJA, meals during business travel and meals at a seminar or conference are 50% deductible. Additional guidance is available from the Internal Revenue Service in "Publication 463: Travel, Entertainment, Gift, and Car Expenses." A copy of this publication is available at: www.irs.gov/forms-instructions . Alternative or subliminal help with this most confusing area of our tax rules might require seeking professional assistance. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com C&G WorldWide Drilling Resource ® 7 JUNE 2018