Is That Trip Deductible? You Might Think Twice : Taxation: Here’s what you can claim--and what you can’t--for educational, business and free-lance journeys.

Good old George M. Cohan. As a Broadway tunesmith at the turn of the century, he gave us “Yankee Doodle Boy.” As a composer-patriot during World War I, he gave us “Over There.” And as a frequent traveler willing to fight for his right to tax deductions, he gave generations of traveling taxpayers a break.

In winning a fight with the Internal Revenue Service about 60 years ago, Cohan persuaded a federal court that he should be able to claim deductions for some of his business travel expenses, even if he had no specific documentation.

Alas, time passes. Cohan himself passed on in 1942. And, more to the point for the millions of Americans who wonder about their traveling and their taxes around this time of year, the so-called “Cohan Rule” was written out of the tax code in 1963. Since then, any taxpayer who wants to claim deductions for business travel, educational travel or a contribution of time on a far-flung nonprofit project is required to provide “adequate record and sufficient evidence” of what was spent and why it should be allowed as a deduction.

Yes, it’s a 30-year-old issue. But IRS officials say it still comes up often, and underlies many of the thousands of questions raised annually by taxpayers--and by auditors--about travel and taxes.

“Travel and entertainment expenses,” said IRS spokesman Robert Giannangeli last week, “are areas where for years there has been some fudging going on.”

He and others agree that most travel-tax questions fall into three categories: educational trips (Can I write off that medical symposium in Katmandu?) ; trips that mix business and pleasure ( What if I stretched a three-day conference in Rio into a two-week trip? ), and trips that might qualify as free-lance business ventures ( Can I write off that New Orleans trip, since I took some notes and photo s and tried to sell a travel story? )

What lies below are some general answers, as provided by IRS officials in Los Angeles and Washington, D.C. For real tax advice, talk to a tax preparer, an attorney or the IRS. An address and some phone numbers are listed at the bottom of this column.

Education. The greatest source of information on educational expenses is probably IRS Publication 508, which is free. In eight intermittently clear pages, the pamphlet explains that a taxpayer could theoretically claim deductions for transportation expenses, for lodging, for 80% of meals--perhaps even for cruise costs--if the main purpose is to attend a work-related course or seminar.

To be deductible, such programs must “maintain or improve skills needed in your present work.” A program mandated by your employer may or may not be deductible, depending on specific details.

There are plenty of professional seminars out there, especially for doctors and nurses, and some of them are likely to make, say, a pipefitter more than a little jealous. This year alone, the El Cerrito, Calif.-based adventure travel company Mountain Travel/Sobek is offering university-accredited “seminars in wilderness medicine” that include climbing Mt. Kilimanjaro, rafting Chile’s Bio-Bio River, hiking in Patagonia and exploring the Galapagos Islands, as well as a four-day symposium on wilderness medicine and the environment March 13-17 in Katmandu, Nepal. Prices run $2,490-$4,200, and seminars usually include 16 hours of lectures over 12-16 days. (One seminar leader, company officials note, is Kenneth Kizer, director of the state Department of Health Services under Gov. Deukmejian.)

The tour company makes no guarantees of deductibility, and its director of medical education, Philip Rasori, added that “nobody seems to know” exactly how many hours of lectures it takes to make a day deductible. But besides the listings in its 1993 catalogue, the company highlights the potential for tax deductions.

IRS officials say they count on taxpayers to apply “common sense” when evaluating educational travel programs. One hour of lectures a day may not impress an auditor; eight hours probably will.

Auditors also tend to be unconvinced by the increasing number of nonprofit programs that require a few hours of daily volunteer work and leave the rest of the day free. Say, for example, a volunteer travels to an archeological dig in Turkey under the auspices of a tax-exempt organization. He or she spends two hours every morning sifting dirt and the rest of the day and night dining and exploring the countryside. That kind of trip can only be written off, IRS officials say, “if there is no significant element of personal pleasure, recreation or vacation” in the undertaking. Two hours of digging daily, they say, does not a deductible journey make.

Business and pleasure. IRS Publication 463 explores business travel, entertainment and gift expenses. Among its advice: Taxpayers may include tips of most kinds in their deductible expenses, but can deduct only 80% of their business-related meals. Also, taxpayers generally can’t deduct the expenses incurred when a spouse comes along on a business trip. (If you stay in a $115-a-night double room on a business trip, and a single at the same hotel costs $90, only $90 per night of the hotel bill is deductible.)

In many cases, business travelers can simplify their record-keeping by using the government’s standard meal allowance figures: $26-$34 a day in the continental United States. When actual expenses exceed those numbers, warns Publication 463, travelers “cannot deduct expenses for meals to the extent they are lavish or extravagant.”

For many travelers, the big riddle is whether they can tack a few days of pleasure onto a business trip. IRS spokesman Don Roberts offered this general guideline:

“If you’re gone for 10 days and six days are business . . . then probably 60% of your expenses are going to be deductible as business spending, and 40% are not.” If the trip were inside the United States, Roberts added, the air fare would be fully deductible. On a trip outside the country, that, too, would be pro-rated. Thus, if you take a $1,000 round-trip flight to Europe for a six-day convention, but stay 10 days, $600 of the air fare would be deductible.

The greater risk comes when you accumulate more recreational time on the road than your professional time. “If it’s a three-day convention and you stay two weeks, you’re probably going to lose it” as a deductible business trip, said the IRS’s Giannangeli. “If you spend the majority of your time on non-business activities, it’s going to be difficult to prove it was a business trip.”

Free-lance ventures. Many writers and photographers harbor high hopes for the deductibility of their trips. The conventional wisdom is that if you take lots of notes and photos, and try to sell an article to a magazine or newspaper, your trip can be deducted.

But IRS officials are wary about this. IRS spokesman Don Roberts said would-be travel writers and photographers must “establish that you are in the business of either writing articles for profit or shooting pictures for profit.” The best way to convince an auditor: produce records showing that your work in writing or photography has shown a profit three of the last five years.

Otherwise, the IRS is likely to ask for further data that would separate a hobbyist from a professional. If you can’t show a professional pattern of conduct--letters to editors, letters from editors, some income to offset your expenses, for instance--you may be out of luck.

A couple of footnotes: Though tax guidelines on travel haven’t changed substantially in the last two years, IRS officials say, President Clinton did propose a notable change in his economic address to Congress Feb. 17. The President called for reducing deductions for business meals and entertainment. Clinton’s proposal, Roberts said, would make 50% of business meals deductible instead of the current 80%.

Finally, IRS spokesman Roberts noted that most travel expenses come under the category of “miscellaneous itemized deductions.” In order for a taxpayer to save money by claiming those deductions, they must add up to more than 2% of the taxpayer’s adjusted gross income--$800, for a taxpayer with $40,000 in income. Most individuals and married couples with annual incomes beyond $105,250 face further limitations on deductions. Once these and other factors are considered, Roberts said, fewer than 30% of taxpayers end up itemizing their deductions.

For more information: To request IRS publications 463 (Travel, Entertainment and Gift Expenses) and 508 (Educational Expenses), taxpayers can write the Internal Revenue Service, WADC, Attention: Mail Edit., 3041 Sunrise Blvd., Rancho Cordova, Calif. 95742. To hear tax preparation information via the IRS’s pre-recorded “teletax” phone system, call (800) 829-4477 from Southern California. To question a live IRS representative, call (800) 829-1040.