April 15, 2006
Visiting Professorships and the AMT
Posted by Victor Fleischer

Happy tax day everyone. 

As Christine and others have noted, a visiting professorship can be a wonderful tax shelterIn theory.  Meals and lodging expenses incurred while "away from home" may be deductible, and per diem allowances make the accounting tolerable.  As I recently discovered, however, the AMT is brutal, especially if you have other tax preference items like deductible medical expenses, high state income taxes, or lots of kids.  So a word to the wise -- if you are planning a visit to another institution, don't assume that your meals and lodging will be deductible. 

As the AMT becomes a larger and larger feature of our tax system, taxprofs will eventually have to adjust.  I think those of us who teach the basic FedTax course have been ignoring it as much as possible, hoping Congress will make it go away.  But eventually, as the AMT captures more and more people, we may have to cave in and really teach the darn thing.  In ten years, maybe the basic course should be called "Federal AMT," with a couple of historical lectures about the old tax system and how the new de facto system came about. 

UPDATE:  See Jeff Kahn's comment below.  The cite is 80 Wash L Rev 1, 21-25 (2005).  You can download the paper here

The planning option -- taking a reduced salary in exchange for reimbursement of housing and meals -- requires considerable cooperation from the adminsitration of the host institution.  As a win-win situation, the two sides should be able to reach the tax-efficient result.  But I wonder -- are there practical reasons that Deans might refuse to reimburse for meals and lodging?  Would they worry that future visitors might push for reimbursement without taking a reduction in salary?  Note that in many cases the host institution merely reimburses the home institution for the professor's usual salary. 

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