I am a home based travel agent. I sold a tour to the UK last year to 19 people (and me). Can I deduct any of the cost of any of my expenses for the actual trip?

[mncap]

I accompanied the group and helped with the tour daily. It was an escorted tour so it wasn't just me conducting the tour, but I helped with guiding them and answering their questions.

[Coleen3 · Accepted solution]

No, unfortunately. You had no clear business purpose for the trip. The fact that you helped out the tour guide does not give it a business purpose

Business-related foreign travel expenses are tax deductible. However, because of the potential for abuse (e.g., sneaking in a Paris vacation under the guise of a business trip), these expenses are scrutinized closely by the IRS. 

Good documentation is an absolute must. If you travel outside the U.S. purely for business purposes, all your travel expenses of getting to and from your business destination are deductible. However, if you spend part of your time in a foreign country engaging in personal activities, you may have to allocate your travel expenses and only deduct the amounts allocated to business.

Foreign travel expenses are fully deductible if you spent 100 percent of your time abroad on business. However, if you engaged in any non-business activity, whether sightseeing or visiting old friend, you may have to make an allocation between deductible business expenses and non-deductible personal ones.

 If you spend part of your time in a foreign country engaging in personal activities, you may have to allocate your travel expenses in proportion to the number of days you spent on nonbusiness activities during your trip, unless you meet one of the following conditions:

• Less than one week outside the US. You were outside the U.S. for a week or less, combining business and personal activities (a week is seven consecutive days - not counting the day you leave the U.S., but counting the day you return to the U.S.).
• Less than 25 percent of time on personal activities.You were outside the U.S. for more than a week, but you spent less than 25 percent of the total time you were in a foreign country on personal activities (counting both the day your trip began and the day it ended).
• Vacation was not a consideration. You can establish that a personal vacation was not a major consideration.

If you meet one or more of these conditions, your trip is considered to be entirely for business. This means you can deduct all of your business-related travel expenses.