In a recent tax court verdict fishermen will cut half of their mea expenses while traveling away from home in pursuit of a trade or business. The decision was made last year in Kurtz v. Commissioner of Internal Revenue. It is reported that Kurtz attempted to deduct 100 percent of the federal per diem (per day) rate for each day he was at sea, claiming an exception to the general rule that a person may only deduct 50 percent of meal expenses.
The deduction is said to be based on the per diem rate rather than actual costs, tax liabilities owed by commercial fishermen could potentially be reduced. Sam Thompson, administrative staff at George R. Rieth C.P.A., P.C., said that fishermen should be taking a look at their actual expense(s) so if they have expenses for gear, meals, sleeping bag, whatever they need, and they should take a look at whether or not actual expenses are greater or less than the 50 percent reduction per day at sea.
For Kodiak the rate is approximately $82 per day, and $86 per day for Dutch Harbor. One-half of the daily rate may be claimed per day at sea instead of deductions for provision at actual cost. To make it more viable qualifying commercial fishermen should document the dates spent at sea and/or setnet sites, as well as the location. All settlement statements also should be reviewed to clarify what amounts, if any, were deducted from gross proceeds on each trip made. An analysis of this information will aid in determining whether actual costs or the per diem rate deduction would be most beneficial.
