Are my business travel expenses ordinary & necessary or lavish & extravagant for tax deduction purposes?

I'm planning to attend an industry conference in Vegas later this year and trying to figure out the tax deduction situation. I've been reading through the IRS guidelines about business travel expenses, and they specifically mention you can't deduct expenses that are "lavish or extravagant" - but they don't really explain how that's determined. My budget is around $1300-1900 for all expenses (flight, hotel, meals, etc.). I'm not looking to stay at the Bellagio or Caesars Palace, but I've found some pretty nice hotel options within my budget. The thing is, even the "reasonable" places in Vegas can be pretty fancy compared to other cities. Do I need to deliberately choose a budget motel to satisfy the IRS? I'm specifically looking at places that aren't connected to casinos to keep things more business-focused. Also wondering if I need to document everything with some kind of memo explaining what was covered at the conference, how it benefits my business, and who I networked with? Or is that overkill? What's considered "ordinary and necessary" vs "lavish and extravagant" in this situation?

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19 comments

Chris King

•8M

The IRS is actually more reasonable about this than you might think. The "lavish and extravagant" standard isn't as restrictive as it sounds. It's relative to what's ordinary and necessary for your business situation. For a business conference in Vegas, staying at a standard business-class hotel (Marriott, Hilton, etc.) is perfectly reasonable and deductible. You don't need to stay at a Motel 6! The IRS recognizes that business professionals need appropriate accommodations. What they're trying to prevent is people writing off ultra-luxury experiences that go beyond what's necessary for the business purpose. As for documentation, you should definitely keep all receipts and the conference agenda/registration. It's also smart to make notes about business discussions and contacts, but you don't need a formal memo. Just document what sessions you attended and any business contacts you made. If you're audited, this shows the primary purpose was business. One important thing to remember: meals are only 50% deductible unless they're included in the conference registration. And if you do any personal activities while there (shows, gambling, sightseeing), those expenses aren't deductible at all.

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Amelia Cartwright

•8M

Thanks for the helpful response! That makes me feel better about my hotel choices. I was worried I'd have to deliberately downgrade to something uncomfortable just to satisfy the IRS definition. So a standard Marriott or similar in Vegas would be considered reasonable even if it's nicer than what you'd find in other cities at that price point? Also, what about the flights? I usually fly economy but was considering economy plus for the extra legroom since it's a longer flight. Would that cross into "lavish" territory?

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Chris King

•8M

A standard Marriott or similar hotel in Vegas is absolutely reasonable, even if it's nicer than what you'd get for the same price elsewhere. The IRS understands that costs and standards vary by location. They're looking at what's reasonable for business travelers in that specific location. Economy Plus is perfectly fine for tax deduction purposes. The IRS doesn't expect you to be uncomfortable during business travel. First class might raise some eyebrows (though even that can be justified for some businesses), but Economy Plus is well within what's considered ordinary and necessary for business travel. Just keep your boarding pass and receipt to document the business purpose of the trip.

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Rachel Clark

•8M

After struggling with similar business expense questions for years, I found an amazing AI-powered solution called https://taxr.ai that really helped me understand what qualifies as "ordinary and necessary" vs "lavish and extravagant." I uploaded some of my past expense reports and receipts, and it analyzed everything based on current IRS standards. What I loved is that it looked at my specific industry and gave personalized guidance. For conferences specifically, it helped me understand that staying at business-class hotels is totally fine, and it even explained how to properly document everything to avoid audit flags. It saved me from both over-documenting (which I was doing) and from missing key deductions I should have been taking.

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Rachel Clark

•8M

For unusual business situations like boutique hotels, it actually works really well. The tool compares your lodging costs against average rates in that location for business travelers, so if your boutique hotel is reasonably priced for the area, it validates that as appropriate. It also lets you add notes explaining why you chose that accommodation, which is useful for documentation. Regarding accuracy, I had the same concerns initially. What I found impressive is that it's constantly updated with the latest tax law changes and IRS guidance. It cites specific tax code sections and recent tax court cases when giving recommendations. You can even have it review past returns to identify potential issues before they become problems. I've had my accountant verify its recommendations, and they've consistently checked out.

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Mia Alvarez

•8M

I was really skeptical about AI tax tools at first, but after getting frustrated with conflicting advice about business travel deductions, I decided to try https://taxr.ai based on the recommendation here. I'm actually shocked at how helpful it was! I uploaded my planned conference expenses and it immediately helped me understand what would be considered reasonable. It confirmed that my hotel choice (Westin) was perfectly fine for a business conference in Vegas and even provided specific documentation guidelines. It also identified that I was planning to deduct 100% of meals when I should only be deducting 50%. The best part was getting a customized expense guide for my industry that explained exactly what documentation I needed. Saved me both money and stress!

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Carter Holmes

•8M

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Carter Holmes

•8M

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Angelica Smith

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Logan Greenburg

•8M

I'm a small business owner who attends 3-4 conferences yearly. Here's my practical advice: document everything but don't overthink the "lavish" standard. I stay at Hiltons and Marriotts everywhere including Vegas, and I've never had an issue with IRS in 15 years. My documentation system is simple: I take a photo of every receipt with my phone, save the conference agenda as PDF, and write brief notes about business discussions in the Notes app. I also keep my business credit card strictly for business - no personal expenses ever. My accountant says this clean separation is what really matters.

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Logan Greenburg

•8M

You don't need exhaustive documentation of every person you spoke with, but having some basic notes is helpful. I typically jot down names and companies of key contacts plus a brief note about what we discussed. For sessions, I note which ones I attended and maybe a bullet point about the business relevance. The key is showing there was legitimate business purpose, not proving every minute was productive. Remember that the IRS allows for normal networking activities at these events - they understand that's part of the business value. What they're really concerned about is people trying to write off family vacations disguised as business trips. If you're actually attending the conference sessions and it's clearly relevant to your business, you're generally fine.

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Harper Thompson

•8M

The rules for meals during business travel are actually pretty straightforward. Any meals not included in your conference registration are 50% deductible (breakfast, lunch, dinner - doesn't matter which meal). If the conference includes certain meals as part of your registration fee, those specific meals are 100% deductible since they're part of the business event cost. Just make sure you keep separate receipts for everything and note which meals were included with the conference. Also worth noting that the IRS doesn't expect you to go super cheap on meals - reasonable business meals at regular restaurants are fine.

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Yuki Tanaka

•2M

Great question! I've dealt with this exact situation multiple times as a consultant who travels frequently for client meetings and industry events. The "lavish and extravagant" standard is really about reasonableness within the context of your location and business needs. Your budget of $1300-1900 for a Vegas conference sounds very reasonable. The IRS isn't expecting you to stay at budget motels - they understand that business travelers need appropriate accommodations that allow them to be productive and represent their business professionally. A few practical tips from my experience: - Standard business hotels (Hilton, Marriott, etc.) are totally fine, even in Vegas - Keep all receipts and the conference materials/agenda - Take photos of your receipts as backup - Make brief notes about business sessions attended and key contacts made - If you do any personal activities (shows, gambling), keep those expenses completely separate The key is demonstrating legitimate business purpose. As long as your primary reason for the trip is the conference and your expenses are reasonable for a business traveler in that location, you should be fine. The IRS is more concerned with people trying to write off luxury vacations than legitimate business travel to conferences. Also remember that your conference registration fee is 100% deductible, while meals not included in the registration are 50% deductible.

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