New Provisions Will Impact All Businesses

Published date01 January 2016
Date01 January 2016
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.22130
New Provisions Will Impact
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.
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
• 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.
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

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