TAX TIP OF THE MONTH The tax-smart vacation
By Editor: Robert Wool Reporter associate: Deborah Lohse

(MONEY Magazine) – You have to fly from your Los Angeles home to Orlando, Fla. on business. Your wife and two children have been pleading for a vacation at the new Disney-MGM Studios Theme Park outside Orlando. Fine: they come along. Your business expenses are deductible either by the company you work for, or by your own company if you are your own boss. That means 100% of your air fare (about $950) and your hotel room ($120 a night), plus 80% of your meals and business entertainment expenses. While your family's expenses are not deductible, there are still big out-of-pocket savings possible: your plane fare of $950, which you would otherwise have paid yourself, and hundreds of dollars more in hotel bills. Say the trip spans five days and you work three. Your company reimburses you the cost of a single room. Your wife and children share the room for an additional cost to you of only $10 to $20 a night. The other two nonbusiness days will not be deductible. Even so, you will have saved some $315 on the hotel, or a total of $1,265 when you add in your air fare. Nice vacation.