Chapter 1, Problem 5P

Monica, a self-employed taxpayer, travels from her office in Boston to Lisbon, Portugal, on business. Her absence of 13 days was spent as follows: a. For tax purposes, how many days has Monica spent on business? b. What difference does it make? c. Could Monica have spent more time than she did vacationing on the trip without loss of existing tax benefits? Explain.

On Thursday, Justin flies from Baltimore (where his sole proprietorship office is located) to Cadiz (Spain). He conducts business on Friday and Tuesday; vacations on Saturday, Sunday, and Monday (a legal holiday in Spain); and returns to Baltimore on Thursday. Justin was scheduled to return home on Wednesday, but all flights were canceled due to bad weather. As a result, he spent Wednesday watching floor shows at a local casino. a. For tax purposes, what portion of Justins trip is regarded as being for business? b. Suppose Monday was not a legal holiday. Would this change your answer to part (a)? Explain. c. Under either part (a) or (b), how much of Justins airfare qualifies as a deductible business expense?