|Christopher Columbus on speed boat.|
Ocean travel for business purposes is deductible, but Internal Revenue Code section 274(m) imposes an upper limit on the deductible amount, of around $734 per day for fall and winter travel and $624 per day for spring and summer travel. The maximum allowed deduction is technically defined as twice the daily per diem amount allowed for federal executive branch employees.
For example, let's say that a lawyer traveled by ocean liner from New York to London on business in October of 2012. The trip took six days. Her maximum deduction for the travel costs is $4,404 for the business expense (6 x $734).
This deduction for "luxury water transportation" is solely for traveling from one location to another by ship for business purposes. If the business purpose for the travel is on the boat itself, like a convention, other limitations apply.
§ 274 Disallowance of certain entertainment, etc., expenses.
(m) Additional limitations on travel expenses.
(1) Luxury water transportation.
(A) In general. No deduction shall be allowed under this chapter for expenses incurred for transportation by water to the extent such expenses exceed twice the aggregate per diem amounts for days of such transportation. For purposes of the preceding sentence, the term “per diem amounts” means the highest amount generally allowable with respect to a day to employees of the executive branch of the Federal Government for per diem while away from home but serving in the United States.
(B) Exceptions. Subparagraph (A) shall not apply to—
any expense allocable to a convention, seminar, or other
meeting which is held on any cruise ship, and