Treasury Issues Guidance on Deductibility of Convention Expenses

[2] Section 274(h) of the Internal Revenue Code provides that expenses incurred by U.S. taxpayers for conventions, seminars, or similar meetings in the North American area that are otherwise deductible as ordinary and necessary business expenses will be allowed without regard to the additional statutory limitations applicable to foreign convention deductions. For this purpose, the North American area includes the United States and its possessions, Canada, Mexico, jurisdictions that have entered into Compacts of Free Association with the United States providing for such treatment, and jurisdictions that are beneficiary countries as defined in the Caribbean Basin Economic Recovery Act of 1983 and that have in effect a tax information exchange agreement with the United States consistent with the standards described in section 274(h)(6)(C). Revenue Ruling 2003-109 reflects tax information exchange agreements in effect with such beneficiary countries, including the tax information exchange agreement with Antigua and Barbuda that recently came into effect.

[3] The revenue ruling provides that it will be updated as future developments result in the inclusion of other areas in, or the exclusion of areas from, the North American area.