Norwegian Cruise Lines  has introduced their US hulled ships to the US cruise market so these ships are able to operate itineraries between contiguous US ports as well as foreign ports  utilizing the special exemption to the Jones Act.  This then is the current situation - its is confusing to the layman, hence  a substantial number of our clients have asked us to define exactly what this means to them and their clients as far as tax implications are concerned for their clients programs sailing on the NCL Hawaiian itineraries.

NCL is not the only line operating American hulled ships which comply with the necessary requirements to allow them to operate Tax Free cruise programs.  Contact us for more details on these lines.

As NCL have a head start on this marketing advantage, we have included their Q & A on the subject as it seems to cover all the pertinent points very clearly.  Needless to say, it is always a wise idea to do your own due diligence and consult a tax specialist before committing to a program of this nature.

Tax Comparisons: Q & A

Q: What is the benefit of having a meeting on a US-flagged cruise ship versus a foreign-flagged cruise ship?
A: The cost of meetings held aboard US-flagged cruise ships can be fully deductible for tax purposes while meetings held aboard foreign-flagged cruise ships do not qualify for either personal or corporate tax deduction.

Q: How does the IRS determine if a meeting can be written off at a US hotel or US-flagged ship?
A: Main purpose must be business.

Q: What constitutes a meeting for tax purposes?
A: The meeting, seminar or convention must be primarily for "business purposes" in order for your client to be able to claim any tax deduction. This would apply for Corporate as well as Association meetings. Please advise your client(s) to consult their tax advisor for travel expense deductibility requirements and limitations.

Q: What does the IRS mean by "business purpose" of meeting (listed in question above)?
A: The meeting must be directly related to the participant's trade or business. If the meeting, seminar or convention is for any other purpose (ie. investment, political, social) these expenses may not be deducted.

Q: Are the costs associated with a spouse or companion deductible as part of the meeting cost for Pride of Aloha or a US Hotel?
A: No, participants only.

Q: Does the $2,000 maximum deduction per participant per year vary based on the cruise length?
A: No, the maximum deduction per participant per year is $2,000 regardless of cruise length.