Q: What is the benefit of having a meeting on a US-flagged cruise ship versus a foreign-flagged cruise ship? A: The cost of meetings held aboard US-flagged cruise ships can be fully deductible for tax purposes while meetings held aboard foreign-flagged cruise ships do not qualify for either personal or corporate tax deduction.
Q: How does the IRS determine if a meeting can be written off at a US hotel or US-flagged ship? A: Main purpose must be business.
Q: What constitutes a meeting for tax purposes? A: The meeting, seminar or convention must be primarily for "business purposes" in order for your client to be able to claim any tax deduction. This would apply for Corporate as well as Association meetings. Please advise your client(s) to consult their tax advisor for travel expense deductibility requirements and limitations.
Q: What does the IRS mean by "business purpose" of meeting (listed in question above)? A: The meeting must be directly related to the participant's trade or business. If the meeting, seminar or convention is for any other purpose (ie. investment, political, social) these expenses may not be deducted.
Q: Are the costs associated with a spouse or companion deductible as part of the meeting cost for Pride of America or Pride of Aloha or a US Hotel? A: No, participants only.
Q: Does the $2,000 maximum deduction per participant per year vary based on the cruise length? A: No, the maximum deduction per participant per year is $2,000 regardless of cruise length.
Q: How will tax deductions apply to NCL's new "Cruise and Stay" packages? A: It depends on the purpose of each component of the package (ie. business or pleasure). See below grid:
Scenarios
Tax Deduction for US-flagged Ship portion applies
Tax Deduction for US Hotel portion applies
#1 Main purpose: Business for BOTH, 3-day cruise and 4-day hotel
YES
YES
#2 Main purpose: Business for 3-day cruise, Main purpose: Pleasure for 4-day hotel
YES
NO
#3 Main purpose: Pleasure for 3-day cruise, Main purpose: Business for 4-day hotel
NO
YES
#4 Main purpose: Pleasure for BOTH, 3-day cruise and 4-day hotel
NO
NO
Please see Tax Deductibility Comparison Grid for specific deductions
Q: Are there any other US-flagged cruise ships in the market? A: Yes, however they are small riverboat, coastal cruising ships whose capacities are under 400 passengers.
TAX DEDUCTIBILITY COMPARISONS NCL America Pride of Aloha & Pride of America vs. Foreign-Flagged Ships and U.S. Hotels
- -
US Hotel
US-Flagged Cruise Ship
Foreign Flagged Cruise Ship
Main Purpose - Must Be Business
Y
Y
N/A
Tax Deduction for Participants Only
Y
Y
N/A
Spouse / Companion Deduction
0%
0%
0%
Location Requirements
North American Region
All US Ports
N/A
** Cruise Fare or Hotel Room Rate
100% of Single occupancy rate
100% of Single occupancy rate
0%
Food
50% All Food
100% All Food included in Cruise Fare
50% Optional A la Carte Dining
0%
Entertainment
50% All Entertainment
100% All Entertainment included in Cruise Fare
50% Any additional entertainment (i.e. Shore Excursions, Spa, etc.)
0%
All NCF's
N/A
100%
0%
All Taxes (GET, Government Taxes and Fees), Hotel Taxes
100%
100%
0%
Gratuities
100%
100%
0%
Transportation / Airfare
100%
100%
0%
Maximum deduction per participant per year
N/A
$2,000
N/A
*This data is being provided for information purposes only and should not be regarded as tax or legal advise for your reliance. Please consult your tax advisor regarding your specific situation.
