New Provisions Will Impact All Businesses

• DOI: http://doi.org/10.1002/jcaf.22130
• Published date: 01 January 2016
• Date: 01 January 2016

113

© 2016 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22130

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IRS

New Provisions Will Impact

AllBusinesses

Caroline D. Strobel

We have not had a tax bill

thisyear and certainly will

not see any sort of compre-

hensive tax reform. However,

a number of fairly significant

changes have been made as

part of other legislation and

through regulations and notices

issued by the IRS. This column

includes some of the more

interesting ones.

LOCAL LODGING EXPENSES

Lodging expenses a tax-

payer incurs while not traveling

away from home are consid-

ered personal expenses and

are not deductible. Under new

rules (Reg. Sec. 1.162-32), local

lodging expenses that meet cer-

tain criteria will be considered

ordinary and necessary busi-

ness expenses and therefore

deductible. Under the follow-

ing safe-harbor rules, local

lodging will be considered an

ordinary and necessary busi-

ness expense if:

• The lodging is necessary

for the employee to partici-

pate fully in or be available

for a bona fide business

meeting, conference,

training activity, or other

business function;

• The lodging does not

exceed five calendar days

and does not occur more

than once each calendar

quarter;

• The employer requires

theemployee to remain

at the activity or function

overnight; and

• The lodging is not extrava-

gant or lavish and does not

provide a significant ele-

ment of personal pleasure.

These final regulations

clarify that expenses that

do not qualify for the safe

harbor may nevertheless be

deductible under the facts-

and- circumstances test. One

factor considered under the

facts-and- circumstances test is

whether the expense is a bona

fide condition or requirement

of employment imposed by the

taxpayer’s employer. Examples

contained in the regulations

to illustrate the facts-and-

circumstances test include

employees who are required

to stay at a local hotel during

a work-related training ses-

sion; professional athletes who

are required to stay at a local

hotel before a home game; an

employee who is relocating for

work and looking for a new

home; an employee who has to

stay at a hotel near the office

while working long hours; and

employees who occasionally

are on call for a night duty shift

and stay at a local hotel.

These new rules are help-

ful in allowing an employer to

reimburse an employee when

they are required because of

their work requirements to

remain at or near a workplace.

The employer can then deduct

any reimbursed expenses or

pay the expenses directly to the

lodging provider.

NEW IRA ROLLOVER RULES

Beginning in 2015, no

matter how many individual

retirement accounts (IRAs) a

taxpayer has, the taxpayer is

limited to one rollover per year.

By a rollover, the rule means

a distribution out of the IRA

to the owner, and the owner

in turn contributing the funds

within 60 days to a different

IRA account. An individual

receiving an IRA distribution