Industry events are a good way to gain know-how, find new suppliers and network with others in the industry. Best of all, Uncle Sam, in the form of our tax laws, is willing to pick up the expense of attending many of these events — at least for some.

Bottom-line, green industry businesses can deduct all non-extravagant “ordinary and necessary expenses” incurred attending business-related meetings, conferences, shows and other events. With certain limits, allowable expenses include travel, lodging, meals and associated out-of-pocket costs.

Unfortunately, many deductions for show attendance previously claimed on the personal tax returns of attendees, were temporarily suspended by the December 2017 Tax Cuts and Jobs Act (TCJA) — the same bill that put a bigger crimp in the meals and entertainment deductions.

For a garden center to take the deduction, it must have the convention expenses on its books. If the owner/employee, or any attendee, pays an expense personally, they must submit an expense report detailing the expense, and the business must reimburse that expense to get the deduction.

Reform meals and entertainment

The TCJA eliminated, at least until 2026, the deductibility of some itemized deductions of individuals. Targeted were miscellaneous itemized deductions subject to the former 2 percent floor. That means unreimbursed employee business expenses (including expenses for travel, lodging, meals, entertainment, continuing education and others) can no longer be claimed.

Fortunately, many of these deductions remain available for use by garden centers, including sole proprietorships. Although the TCJA isn’t too clear on how the new rules apply to business meals, under the new law, entertainment is no longer deductible.

However, no change has been made to the 50 percent deduction for business meals or the 100 percent deduction allowed for expenses incurred for recreational, social or similar activities that are primarily for the benefit of employees. Until the IRS issues some much-needed guidance, the specific tax treatment for many of these meals remains open to interpretation.

Travel, meals and entertainment

Although the TCJA appears to have wiped out many show-related expense deductions, many remain, at least for a garden center. If, for example, business is conducted during a meal, a deduction may be available. Of course, a deduction of 50 percent of the cost of meals incurred while traveling away from home on business is still possible.

While the tax laws limit the business meal deduction to only 50 percent of the expense, not too surprisingly, those rules contain quite a few gray areas. If, for instance, the business foots the bill to take employees to a conference, the full amount of their meals is deductible by the greenhouse business. The 50 percent rule applies only to the business owner.

If, on the other hand, a meal immediately precedes or follows a substantial business meeting, 50 percent of the cost can be deducted — so long as it was not “lavish or extravagant.”

Of course, if the garden center provides meals in a hospitality suite at a convention with the clear intent of generating business, the cost is usually deductible. Other meals, outside, that were paid for purely for goodwill purposes, may not qualify as “directly-related” to the business. Under the TCJA, meals during business travel and meals at a seminar or conference, are 50 percent deductible. Because entertainment-related meals are now treated differently from customer or client business meals, it may be necessary to account for each separately. For instance, client or customer business meals are deductible only if they are not lavish or extravagant and only if the taxpayer, or a representative, is present. Because entertainment expenditures are no longer deductible, it is necessary to conduct business with the client or customer for the meal to be deductible.

Mixing business and pleasure

Generally, taking extra days for a mini-vacation won’t result in the loss of the show-attendance deduction. The tax rules permit a deduction for the total travel costs when the main purpose of the trip is attending a convention, trade show or conference.

When combining a vacation or side trip with convention attendance, a good rule is to spend more days on business than on pleasure. When mixing business with pleasure, round-trip travel is fully deductible if more days are spent on business than on pleasure. Under the tax rules, former and present, days spent traveling are usually considered business days. Obviously, lodging expenses cannot be deducted for personal days, but purchasing a reduced-fare ticket requiring stay-over days, means lodging costs for stay-over days is permissible. When traveling by car, the standard mileage deduction for the year of travel can be used. The standard rate for use of a car, van or pick-up is up 3.5 cents from 2018 to 58 cents per mile for business travel in 2019.

Friends, family and others

When friends, family or other guests accompany an attendee to a show, convention or conference, only the business-related portion of the expenses can be deducted. In other words, deducting the cost of the family’s hotel suite is a no-no. Instead, the deduction should be limited to the cost of a single room, an amount readily available from the hotel. Of course, if a bona fide business purpose exists for the individual's presence, and can be proven, a tax deduction might result. Incidental services, such as keeping notes or assisting in entertaining customers, are not enough to make the expenses deductible. Generally, the travel expenses of someone accompanying an attendee can be deducted if that person: is an employee of the business; has a bona fide business purpose for the travel, and would otherwise be allowed to deduct the travel expenses.

Convention types

Any garden center clearing the hurdles created by our lawmakers, with the proof to support it, may deduct the entire cost of sending attendees to a convention, show or conference (subject to the usual 50 percent limit on meals and entertainment) and minus any attendees’ personal expenses. However, the rules are tighter if the event is held outside the North American area or on a cruise ship.

Foreign conventions: To deduct the expense of attending a trade show or convention held outside North America, the business must show that the event is directly related to the active conduct of the garden center, and it is as reasonable for the event to be held outside the North American area as it is to hold it within the North American area.

Cruise ship conventions: To deduct a cruise ship convention, meeting or other event, even more stringent rules exist. First, the cruise ship must be a U.S.-registered vessel. Next, the ship must make all of its ports of call in the U.S. or U.S. possessions. Finally, the tax law limits cruise ship convention deductions to only $2,000 per year. And don’t forget that you need to submit a signed, written statement stating the total days spent on the ship and how many hours were devoted to business each day. Another statement, this one from an officer of the sponsoring group or organization confirming both the scheduled activities and the attendance of the participant, is also required.

Those dreaded receipts

While receipts for expenses of $75 or less are not required, whenever business expenses are claimed, it’s usually a good idea to keep detailed records and receipts for everything. They often serve as a reminder of a deductible expense, especially where the payment was in cash.

When attending a show, meeting or conference, a copy of all charges, as well as a copy of the convention schedule/agenda can help prove its relevance to the garden center. Also keep in mind that while there is no overall dollar limit on the amount that can be deducted for the expenses incurred attending a trade show, costs that are “lavish and extravagant” cannot be deducted.

To recap, as with the travel and lodging expenses of other business trips, the primary reason for attending a trade show, convention, meeting or seminar must be business-related to qualify for deductions. When it comes to events for investment, political, social or other purposes unrelated to business, only a limited expense deduction may be available. If the trip is strictly a disguised vacation, business travel expenses cannot be deducted. However, that 50 percent deduction for business-related meal expenses may be permitted. In general, all “ordinary and necessary expenses” for attending business meetings and conferences can be deducted when the expense is directly related to the garden center. With certain limitations, allowable expenses include travel, lodging, meals and associated out-of-pocket costs — so long as they are not extravagant or for personal purposes.

Additional guidance is available from the IRS in "Publication 463: Travel, Entertainment, Gift and Car Expenses." A copy of this publication is available at irs.gov/formspubs. The principal or manager of any garden center who needs help with this most confusing area of U.S. tax rules might seek professional advice.

Mark is a financial writer based in Ardmore, Pa.

Garden Center magazine has announced speakers for the Garden Center Executive Summit, an educational conference to provide key decision-makers at independent garden centers with actionable ideas they can take back to their businesses and opportunities to network. The inaugural Executive Summit, planned in collaboration with Garden Center’s Conference and Editorial advisory boards, will take place Feb. 18-20, 2019, in Denver, Colorado.

The speaker lineup includes Ian Baldwin, who will address benchmarking; Julie Kouhia, CEO of Molbak’s Garden + Home, who will discuss how garden centers can remain relevant in a rapidly evolving retail environment; Susan Bachman West, president of Bachman’s who along with Mark Bigej, chief of operations of Al’s Garden & Home, will explain how IGCs can improve the employee experience; Richard Christakes, CEO of Alsip Home & Nursery, who will share his company’s efforts to let customers shop how they want to shop by offering e-commerce and in-store delivery; and Rob Sproule, co-owner of Salisbury Greenhouse, who will explain how to find the right digital marketing strategies for your garden center.

Al’s, Alsip, Molbak’s and Salisbury are among the 100 companies honored in Garden Center magazine’s 2018 Top 100 Independent Garden Centers list, and ranked companies will be recognized during a celebration and networking event on Tuesday, Feb. 19.

An outline of the conference schedule is on the following page. For more details about the event and to register, visit gardencentersummit.com.

Monday, February 18, 2019

Keynote: Strategy to Survive, People to Drive and Culture to Thrive: Hiring for Success and Developing and Reinforcing Culture | Speaker: Chris Taylor, CEO, Fisher’s Technology

Welcome Reception

Tuesday, February 19, 2019

Keynote: The Lean Garden Center: How Owners Can Incorporate Lean Business Practices to Improve Customer Experience, Culture and More | Speaker: Mark Graban, Author, Speaker, & Consultant, Constancy Inc.

Panel Discussion: The Employee Experience: How to Attract Career Staff and Create an Environment and Culture Where People Want to Work | Speakers: Susan Bachman West, President, Bachman’s and Mark Bigej, Chief of Operations, Al’s Garden & Home

Session: Measuring What Matters: The 5 most important metrics garden centers should be tracking and key benchmarks for the industry | Speaker: Ian Baldwin, garden center consultant and retail expert

Panel Discussion: What’s Driving Consumers: Authenticity, Transparency, Education and Experience | Speakers: Lindsay Squires Chrisp, Events & Community Outreach Coordinator, Tagawa Gardens, and Jennifer Schamber, Greenscape Gardens & Gifts

Panel Discussion: Why I Bought a Garden Center: Setting a Direction for a Newly Acquired or Created Business | Speakers: Casey Landa and Madison Landa Williams, Co-Owners, Boulevard Flower Gardens

Session: Developing a Mission, Vision and Core Values: The Process of Creating and Implementing Guiding Business Principles | Speaker: Jessie Jacobson, President and Owner, Tonkadale Greenhouse

Session: How Garden Center Owners Can Adapt to Rapidly Evolving Marketing Strategies | Speaker: Rob Sproule, Co-Owner, Salisbury Greenhouse

Top 100 Awards Ceremony and Reception

Wednesday, February 20, 2019

Keynote: Staying Relevant in a Quickly Evolving Retail World: What Are Other Retailers Doing and How Can Garden Centers Compete? | Speaker: Julie Kouhia, CEO, Molbak’s Garden + Home

Session: Letting Your Customers Shop How They Want to Shop: The Pros and Cons of E-Commerce, What I Learned from Offering E-Commerce, In-Store Pickup and Delivery | Speaker: Richard Christakes, CEO, Alsip Home & Nursery

Roundtable: 30 ideas in 30 minutes

Spending time with family is a cherished aspect of the holidays for me, and I am grateful to have a large, extended one that includes relatives and close friends. I was watching my friend’s daughters open their gifts from their “aunties” one night before Christmas. The eldest, Maggie, who is 5, showed genuine joy upon unwrapping each gift, taking time to thank the giver and appreciate each one before moving on to the next treasure, tugging a Wonder Woman costume over her nightgown or slipping a bracelet on her wrist. Jenny, Maggie’s 2-year-old sister, watched her closely, eyeing the bracelet, and grabbed for it. Maggie kindly pulled her wrist back, fully aware that if her little sister got a hold of it, the string may snap, the beads scattering in all directions on the floor.

Jenny recovered, shrugged it off and turned her attention to the discarded jewelry box on the floor. She picked it up and admired the relatively plain vessel, opened it and brought the gray box to her cheek, explaining how soft it felt. Her eyes widened, and she brought the container under her nose and breathed in. She sighed with a smile on her face and encouraged us to try — it smelled good, she said. I laughed, thought it was silly, but played along, and took a hesitant, skeptical sniff. I was surprised to find a perfectly balanced, delicate rose fragrance. It was beautiful.

Jenny is particularly perceptive in this way, but most of you likely have a similar story of how a child revealed something to you that you would have otherwise missed. With their fresh, unbiased eyes, they reintroduce us to the small wonders and surprises that surround us, the things that we forget and tend to disregard.

As an editor, I’m often tasked with searching for and correcting the bad — focusing on grammatical mistakes, misspellings, and factual errors. As garden center owners and managers, you likely search for what needs tended to and what may be going wrong — plants that have been watered too much or too little, sparse displays that need to be restocked or a customer who looks confused and needs help. This is essential to our jobs, but it’s also important, for all of us, to look for the good.

Spring is a hectic, grueling season, with everyone working overtime to make sure the garden center is ready, plants are healthy and customers are happy. It’s stressful and likely difficult to take a moment to stop and appreciate what you do. I’ve heard from some that you worry about new customers being confused and overwhelmed by the size of your store and the selection. But it’s equally as likely that your unbiased, inexperienced visitors are taken aback by the beauty of the plants and the respite the garden center can offer, and it’s important to remember and embrace that, too.

Michelle Simakis msimakis@gie.net

Photo: AdobeStock

The 2018 U.S. Midterm elections are behind us. and the makeup of Congress changed, but AmericanHort director of government affairs Tal Coley says the association’s goals remain the same.

“I think we’ll still be able to get a lot of things done, primarily because we have champions on both sides of the aisle,” he says. “I think as a trade association, you never want to gravitate toward one side so much so that you’re not engaging folks from the other side.”

In the U.S. House of Representatives, Democrats picked up a net gain of 40 seats, shifting control to the left.

“Whatever happens in 2020 or whatever happens in the next couple of years, I think we’re well positioned with a Democratic house — we’ve worked well with Collin Peterson [a Democrat representing Minnesota’s 7th congressional district] who is likely to be the chair of house agricultural committee, for instance,” Coley says. “He’s done some great stuff in the ag sphere, but also in the transportation sphere with the regulations and the electronic logging device mandate. Those lawmakers that work with both sides of the aisle — like Peterson — are the ones we rallied around.”

Below, Coley outlines the four issues he has at the top of his list to watch in 2019.

1. Labor

“I haven’t run into anyone who doesn’t have workforce issues on their mind. The labor is issue is paramount. It’s something my colleague Craig Regelbrugge, [senior vice president, public policy and government relations] works on pretty much 100 percent of the time, and he is in the weeds with that stuff. But as I see it, it’s something that with the [Trump] administration and their beliefs, and how Congress has kicked the can down the road on a lot of these things — it’s just very hard to make headway on some of the labor issues. Granted, it looks like the H2B cap might get raised. But there are some strings attached to that, and there might be enforcement measures in place as a trade-off. On the H2A side, I know the administration is making some changes there to make it a bit more user friendly. There’s some regulatory guidance out there on not having to put advertisements and newspapers and what not and doing something online or something like that. I don’t think you’ll see anything comprehensive, but even a little bit of relief on an issue like that can go a long way.”

2. Transportation

“Transportation issues are something I’ve been really focused on. Costs are very high; availability is not as high as we’d like it. Some people are having a really hard time finding people to ship their [products]. We’ve been working on some things [including] some hours of service flexibility measures. I know the agency that’s in charge of the Federal Motor Carrier Safety Administration has proposed some tweaks to maybe add a few hours here or there and give drivers more discretion when adverse conditions hit. Is it a silver bullet to the problem? No, but every little bit helps. Will the prices come down in 2019? I guess that’s just a question of if we can find more truck drivers, right? You already have a labor shortage for people who drive trucks. And you throw a large regulatory paradigm shift on top of that with the electronic logging device (ELD) mandate, and you have the perfect storm in 2018. In 2019, people are a bit more used to it. They are still adjusting, but the agency itself is still out there 11, 12 months later and still trying to explain a lot of the rules and regulations. So, there’s still a lot of confusion with that.”

“There’s also the agricultural exemption [for trucking]. We’re very vocal on that right now because it’s another mitigating type of exemption that can help businesses. If you operate within a 150-mile radius around an agricultural source, that time does not count toward your daily and weekly hour limits. Right now, we’re kind of in a gray area. The definition that they use for this ag exemption is very vague. Some in our industry are using the ag exemption, and I haven’t heard any news about getting large amounts of citations. But when we meet officials at the Federal Motor Carrier Safety Administration, they are adamant that we are not included in that exemption. So, I think for peace of mind on our end and to leave no room for interpretation by enforcement officials, it is essential that we get it spelled out that we are included in that exemption.”

3. Environmental issues

“There’s a lot of action going on with pesticides, and you’re seeing lawsuits and court rulings that I think are going to continue into 2019. There are products that we feel are environmentally safe and good for the industry, and we need to fight for them. And a lot of that action is at the state level, but there are a lot of federal [directives] going on with the EPA. I think we are going to focus on that area.”

4. Taxes

“With the tax bill that was passed last year, this will be the first tax season where a lot of people will be able to utilize some of the new rules, and it’ll be interesting to see how those play out. I know the IRS is writing new regulations when it comes to that. That’s always where the devil in the details matter — the bill says one thing, but the agency interprets it another way and that it doesn’t come out the way it was intended to. Small business issues are on the agenda too. And there’s always an issue or two that you’re not prepared for, that comes out of nowhere. For instance, the trucking issue was one for us last year.”

Chris is assistant editor of sister publication Greenhouse Management.