When to apply for Marriott cards based on offer history

Marriott is the world’s largest hotel chain, with over 9,000 properties in 146 countries spread across 35-plus brands. Like most hotel chains, Marriott offers an extensive family of cobranded credit cards.

Two issuers offer these credit cards: American Express and Chase. Options range from no-annual-fee, entry-level cards to premium cards and a business card.

Here are some of the most popular Marriott credit cards available to new applicants, a snapshot of each one’s welcome offer range and some guidance on the best time to apply.

Note: We’ll only discuss publicly available welcome offers. However, you might receive targeted offers that feature better deals than those outlined below. Also keep in mind that offers may change at any time, and some of those mentioned below may not be available.

Best Marriott welcome offers

Card	Best welcome offer we’ve seen	When to apply
	Earn 200,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	If the offer is at least 185,000 points or at least two free nights (worth up to 85,000 points each)
	Earn 175,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	If the offer is at least 155,000 points
	Earn five free night awards (valued at up to 50,000 points each) after spending $8,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	If the offer is at least 125,000 points or at least three free nights (worth up to 50,000 points each)
	Earn five free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.) Additionally, you can receive up to $100 in statement credits (up to $50 biannually) after spending $500 on eligible airline purchases.	If the offer is at least 150,000 points or at least four free night awards (valued at up to 50,000 points each)
	Earn two free night awards (valued at up to 50,000 points each) after spending $1,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	If the offer is at least two free night awards or at least 60,000 points plus one free night award (valued at up to 50,000 points)

Marriott Bonvoy Brilliant American Express Card

Marriott’s most premium card, the Bonvoy Brilliant, has a $650 annual fee (see rates and fees).

American Express Marriott Bonvoy Brilliant_2025_CCFL — THE POINTS GUY

The card earns:

6 points per dollar spent on eligible purchases at hotels participating in the Marriott Bonvoy program
3 points per dollar spent at restaurants worldwide and on flights booked directly
2 points per dollar spent on all other purchases

The Brilliant offers benefits like automatic Platinum Elite status, an annual 85,000-point free night award each year after renewal (certain hotels have resort fees) and various travel protections in case something goes awry during your travels.

Here are the offers we have seen on the Bonvoy Brilliant:

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Approximate date	Offer	Value*
	Earn 100,000 bonus points after spending $6,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after spending an additonal $2,000 on purchases in the first six months of card membership.	Up to $1,200
	Earn 200,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$1,600
September 2025 to March 2026	Earn 100,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$800
July 2025 to September 2025	Earn 185,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$1,480
	Earn 100,000 bonus points after spending $6,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after spending an additional $2,000 on purchases in the first six months.	Up to $1,200
	Earn 185,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$1,480
October 2024 to March 2025	Earn 95,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$665
August 2024 to October 2024	Earn 185,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$1,480
	Earn 95,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$760
February 2024 to May 2024	Earn 185,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$1,480
November 2023 to February 2024	Earn 95,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$760
September 2023 to November 2023	Earn two free night awards (valued at up to 85,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,360
August 2023 to September 2023	Earn 95,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$760
	Earn 150,000 bonus points after spending $6,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after staying six eligible paid nights at Marriott Bonvoy hotels.	Up to $1,600
January 2023 to June 2023	Earn 95,000 bonus points after spending $6,000 on purchases in the first six months of card membership.	$760

*The bonus offer value is based on TPG’s June 2026 valuations and not provided by the credit card issuer.

Currently, new cardmembers can earn up to 150,000 bonus points: 100,000 bonus points after spending $6,000 on purchases in the first six months of card membership, plus an additional 50,000 bonus points after spending $2,000 on purchases (for a total of $8,000) in the first six months of card membership.

Highest welcome offer

The highest welcome offer we’ve seen on the Bonvoy Brilliant allowed new cardmembers to earn 200,000 bonus points after spending $6,000 on purchases in the first six months of card membership (no longer available).

When to apply

If the offer is for at least 185,000 bonus points or at least two free nights (worth up to 85,000 points each), it’s a good time to consider applying.

To learn more, read our full review of the Marriott Bonvoy Brilliant.

Learn more: Marriott Bonvoy Brilliant American Express Card

Marriott Bonvoy Bevy American Express Card

The Bonvoy Bevy is a mid-tier credit card that earns 6 points per dollar spent on Marriott hotels. It has a bevy of benefits and a $250 annual fee (see rates and fees).

American Express Marriott Bonvoy Bevy_2025_CCFL — THE POINTS GUY

The Bevy comes with perks like automatic Gold Elite status, elite night credits and modest travel protections.

Here are the offers we have seen on the Bonvoy Bevy:

Approximate date	Offer	Value*
	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after spending an additional $2,000 on purchases in the first six months of card membership.	Up to $1,080
	Earn 175,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,400
September 2025 to March 2026	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680
July 2025 to September 2025	Earn 155,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,240
	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after spending an additional $2,000 on purchases in the first six months.	Up to $1,080
	Earn 155,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,240
October 2024 to March 2025	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680
August 2024 to October 2024	Earn 155,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,240
	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680
February 2024 to May 2024	Earn 155,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,240
November 2023 to February 2024	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680
September 2023 to November 2023	Earn 125,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$1,000
August 2023 to September 2023	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680
	Earn 125,000 bonus points after spending $5,000 on purchases in the first six months of card membership. Plus, earn 50,000 bonus points after staying six eligible paid nights at Marriott Bonvoy hotels.	Up to $1,400
January 2023 to June 2023	Earn 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership.	$680

*The bonus offer value is based on TPG’s valuations and not provided by the credit card issuer.

Currently, new applicants can earn up to 135,000 bonus points: 85,000 bonus points after spending $5,000 on purchases in the first six months of card membership, plus an additional 50,000 bonus points after spending $2,000 on purchases (for a total of $7,000) in the first six months of card membership.

Highest welcome offer

The highest welcome offer we’ve seen on the Bonvoy Bevy allowed new cardmembers to earn 175,000 bonus points after spending $5,000 on purchases in the first six months of card membership (no longer available).

When to apply

If the offer is at least 155,000 points, it’s a good time to submit an application.

To learn more, read our full review of the Bonvoy Bevy.

Learn more: Marriott Bonvoy Bevy American Express Card

Marriott Bonvoy Business American Express Card

Small-business owners who frequently stay at Marriott’s properties will find plenty to like about the Marriott Bonvoy Business American Express. The card comes with a $125 annual fee (see rates and fees), but it also offers many perks that can help justify it.

This card offers a free night award of up to 35,000 points (certain hotels have resort fees), elite night credits and solid earnings on Marriott stays.

Here are the offers we have seen on the Bonvoy Business:

Approximate date	Offer	Value*
	Earn 150,000 bonus points and a $125 statement credit after spending $8,000 on purchases in the first six months of card membership.	$1,325, including the statement credit
	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. Plus, earn an additional two free night awards after spending an additional $3,000 on purchases ($9,000 in total) in the first six months of card membership. (Certain hotels have resort fees.)	Up to $2,000
January 2026 to March 2026	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
October 2025 to January 2026	Earn up to 125,000 bonus points: 75,000 bonus points after spending $6,000 on purchases in the first six months of card membership and an additional 50,000 bonus points after spending an additional $3,000 on purchases in the first six months of card membership.	Up to $1,000
July 2025 to October 2025	Earn 125,000 bonus points after spending $8,000 on purchases in the first six months of card membership.	$1,000
	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
February 2025 to March 2025	Earn 125,000 bonus points after spending $8,000 on purchases in the first six months of card membership.	$1,000
October 2024 to February 2025	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
September 2024 to October 2024	Earn five free night awards (valued at up to 50,000 points each) after spending $8,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $2,000
July 2024 to September 2024	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
	Earn five free night awards (valued at up to 50,000 points each) after spending $8,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $2,000
	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
February 2024 to March 2024	Earn five free night awards (valued at up to 50,000 points each) after spending $8,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $2,000
November 2023 to February 2024	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
September 2023 to November 2023	Earn 125,000 bonus points after spending $8,000 on purchases in the first six months of card membership.	$1,000
August 2023 to September 2023	Earn three free night awards (valued at up to 50,000 points each) after spending $6,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)	Up to $1,200
	Earn 75,000 bonus points after spending $3,000 on purchases in the first three months of card membership.	$600

*The bonus offer value is based on TPG’s valuations and not provided by the credit card issuer.

Currently, new applicants can earn 150,000 bonus points and a $125 statement credit after spending $8,000 on purchases in the first six months of card membership.

Highest welcome offer

The highest welcome offer we’ve seen on the Bonvoy Business (no longer available) allowed new cardmembers to earn five free night awards (valued at up to 50,000 points each) after spending $8,000 on purchases in the first six months of card membership. (Certain hotels have resort fees.)

When to apply

If the offer is for at least 125,000 points or at least three free nights (worth up to 50,000 points each), it’s a good time to submit an application.

To learn more, read our full review of the Marriott Bonvoy Business Amex.

Learn more: Marriott Bonvoy Business American Express Card

Marriott Bonvoy Boundless Credit Card

The Marriott Bonvoy Boundless is a mid-tier Chase card with a $95 annual fee. It earns 6 points per dollar spent at Marriott properties.

Marriott Bonvoy Boundless Visa — THE POINTS GUY

The Boundless card also comes with many premiumlike benefits, including an up to 35,000-point anniversary free night award (certain hotels have resort fees), automatic Silver Elite status and elite night credits.

Here are the offers we’ve seen over the past few years:

Approximate date	Offer	Value*
	Earn 125,000 bonus points and a free night award (valued at up to 50,000 points) after spending $3,000 on purchases in the first three months from account opening. Additionally, earn up to $100 in statement credits (up to $50 biannually) after spending $500 on eligible airline purchases. (Certain hotels have resort fees.)	Up to $1,500, including the statement credit
	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. Plus, earn an additional free night award after spending a total of $4,000 on purchases in the first four months from account opening. Additionally, earn up to $100 in statement credits (up to $50 biannually) after spending $500 on eligible airline purchases. (Certain hotels have resort fees.)	Up to $1,700, including the statement credit
January 2026 to March 2026	Earn five free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. Additionally, earn up to $100 in statement credits (up to $50 biannually) after spending $500 on eligible airline purchases. (Certain hotels have resort fees.)	Up to $2,100, including the statement credit
November 2025 to January 2026	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200
September 2025 to November 2025	Earn 125,000 bonus points and one free night award (valued at up to 50,000 points) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,400
July 2025 to September 2025	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200
	Earn five free night awards (valued at up to 50,000 points each) after spending $5,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $2,000
	Earn three free nights (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. Plus, earn 50,000 bonus points after spending $6,000 on purchases in the first six months from account opening. (Certain hotels may have resort fees.)	Up to $1,600
	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200
January 2025 to March 2025	Earn a $150 statement credit after making your first purchase in the first 12 months from account opening, plus earn 100,000 bonus points after spending $3,000 on purchases in the first three months from account opening.	Up to $950
November 2024 to January 2025	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200
September 2024 to November 2024	Earn 125,000 bonus points after spending $5,000 on purchases in the first three months from account opening.	$1,000
March 2024 to September 2024	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200
January 2024 to March 2024	Earn five free night awards (valued at up to 50,000 points each) after spending $5,000 on purchases in the first three months from account opening.	Up to $2,000
August 2023 to January 2024	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening.	Up to $1,200
	Earn 75,000 bonus points after spending $3,000 on purchases in the first six months from account opening. Plus, earn 50,000 bonus points after staying six eligible paid nights at Marriott Bonvoy hotels.	Up to $1,000
	Earn three free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $1,200

*The bonus offer value is based on TPG’s valuations and not provided by the credit card issuer.

Currently, new cardholders can earn 125,000 bonus points and a free night award (valued at up to 50,000 points) after spending $3,000 on purchases in the first three months from account opening. Additionally, earn up to $100 in statement credits (up to $50 biannually) after spending $500 on eligible airline purchases. (Certain hotels have resort fees.)

Highest welcome offer

The highest offer we’ve seen on the Bonvoy Boundless (no longer available) was to earn five free night awards (valued at up to 50,000 points each) after spending $3,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)

When to apply

If the offer is at least 150,000 bonus points or at least four free night awards (valued at up to 50,000 points each), you should consider applying.

To learn more, read our full review of the Marriott Bonvoy Boundless.

Learn more: Marriott Bonvoy Boundless Credit Card

Marriott Bonvoy Bold Credit Card

The no-annual-fee Marriott Bonvoy Bold from Chase is an entry-level Marriott credit card. It offers modest benefits and perks similar to those you would get with elite status for those who don’t stay at Marriott properties frequently.

Marriott Bonvoy Bold Visa — THE POINTS GUY

The Bold offers automatic Silver Elite status, elite night credits and modest travel protections.

Here are the offers we have seen on the Bold card:

Approximate date	Offer	Value*
	Earn 60,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$480
	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
January 2026 to March 2026	Earn two free night awards (valued at up to 50,000 points each) after spending $1,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $800
November 2025 to January 2026	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
September 2025 to November 2025	Earn 60,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$480
July 2025 to September 2025	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
	Earn 60,000 bonus points plus one free night award (valued at up to 50,000 points) after spending $2,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $880
	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
January 2025 to March 2025	Earn 60,000 bonus points plus one free night award (valued at up to 50,000 points) after spending $2,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $880
November 2024 to January 2025	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
July 2024 to November 2024	Earn 60,000 bonus points plus one free night award (valued at up to 50,000 points) after spending $2,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)	Up to $880
	Earn 30,000 bonus points after spending $1,000 on purchases in the first three months from account opening.	$240
	Earn 50,000 bonus points after spending $1,000 on purchases in the first six months from account opening. Plus, earn 50,000 bonus points after staying six eligible paid nights at Marriott Bonvoy hotels.	Up to $800

*The bonus offer value is based on TPG’s valuations and not provided by the credit card issuer.

Currently, new cardholders can earn 60,000 bonus points after spending $1,000 on purchases in the first three months from account opening.

Highest welcome offer

The highest offer we’ve seen on the Bonvoy Bold (no longer available) provided new cardholders two free night awards (valued at up to 50,000 points each) after spending $1,000 on purchases in the first three months from account opening. (Certain hotels have resort fees.)

When to apply

If the offer is at least two free night awards or at least 60,000 points plus one free night award (valued at up to 50,000 points), it’s a good time to consider applying.

To learn more, read our full review of the Marriott Bonvoy Bold.

Learn more: Marriott Bonvoy Bold Credit Card

Application restrictions

Before applying for one of these Marriott credit cards, make sure you’re eligible for the welcome offer.

The Marriott American Express cards only allow you to earn one bonus for each card once in a lifetime, and they have strict rules, so you may not be eligible for some cards’ welcome bonuses.

Additionally, Marriott has extra rules on welcome bonus eligibility if you have previously held other Marriott or former Starwood Preferred Guest credit cards. You can use this eligibility table to see if you are eligible for a welcome bonus.

On the Marriott Chase cobranded cards side, you are subject to the 5/24 rule, which means you can’t have opened five or more personal credit cards across all banks in the past 24 months. This rule is in addition to the Marriott application rules if you have previously held another Marriott or former SPG credit card.

Bottom line

Using the data and offer history above can help you time applications and potentially net you many more Bonvoy points. Historical data shows that, during certain months, welcome offers tend to be higher than in other months year over year.

Lastly, with this offer history, you have a baseline and threshold on the bare minimum welcome offer you should apply for. If it exceeds that threshold, it would be an ideal time to apply for that Marriott card.

For rates and fees for the Marriott Bonvoy Bevy, click here.
For rates and fees for the Marriott Bonvoy Brilliant, click here.
For rates and fees for the Marriott Bonvoy Business, click here.

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Stacie Harris

Stacie Harris is a local resident and reporter of the Maple Grove area. Stacie reports on medicine and science for the Maple Grove Report.

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Recent Reviews

When the IRS Agrees You’re Right But the Court Says You’re Wrong – Houston Tax Attorneys

Say the IRS agrees that you are entitled to a sizeable tax deduction. But on audit, the IRS determines that you reported the tax deduction using the wrong form. The form used does not change the amount of the tax deduction or the taxpayer that would ultimately pay the tax. From the IRS’s perspective, the form is of no consequence. Should the taxpayer be denied their tax deduction?

This scenario highlights one of the most frustrating aspects of working with the IRS and courts on tax matters. Procedural technicalities override substantive entitlement to legitimate deductions. Even when the IRS acknowledges that a taxpayer deserves a deduction, courts sometimes apply rigid formalistic rules that prevent recovery based on form-selection errors.

The court in Shleifer v. United States, 2025 WL [citation needed], S.D. Fla. June 9, 2025, addressed this exact situation. The case involved a depreciation deduction on a private jet purchased through a separate LLC. The court applied the variance doctrine to deny the taxpayer’s tax deduction.

Facts & Procedural History

This tax dispute involves a $1.9 million tax refund claim. The husband worked as a partner at an investment firm requiring extensive travel. The taxpayer chose to fly private through his wholly-owned LLC rather than accept his firm’s commercial airfare reimbursements.

The LLC purchased a 37.5% interest in a private jet for $19.7 million in 2014. The LLC wasn’t structured to collect management or rental fees. The court noted that the LLC was not operated for profit. During 2014, the taxpayer logged 54.1 flight hours with 31.1 hours attributable to business travel.

The taxpayers initially filed their 2014 joint tax return claiming $2.6 million in travel expense deductions as unreimbursed partnership expenses on Schedule E. They paid the required taxes on time. In October 2018, they filed an Amended Tax Returns seeking a $1.9 million refund based on a $5.9 million depreciation deduction for the private jet that they had inadvertently omitted from their original return.

The amended return reported this depreciation deduction on Schedule C as a business loss. This left the LLC with zero gross income but substantial depreciation expenses. The large refund claim triggered Tax Audits.

The IRS questioned whether the LLC operated as a legitimate business entitled to Schedule C treatment. The examining agent ultimately determined that the depreciation could not be claimed as a business expense because the LLC lacked the profit motive required for trade or business status. However, the IRS agent acknowledged that the depreciation deduction “might have been valid if it had been claimed on a Schedule E” as an unreimbursed partnership expense. The agent noted in his examination record that the depreciation was “an investment expense that can be deducted against Flow-thru income on Sch. E.” Rather than allow the taxpayer to correct this form-selection error, the agent chose to deny the claim entirely despite knowing the taxpayer was substantively entitled to the deduction.

The IRS issued a claim disallowance letter which led to Tax Litigation in federal district court. Both parties filed cross-motions for summary judgment.

About Depreciation Deductions

Depreciation deductions under Section 167 represent a method of recovering the cost of business assets over their useful lives. The rules in Section 167(a)(1) allow depreciation for “the reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence)” of property used in a trade or business or held for the production of income.

When a taxpayer purchases business or investment property, they get a tax deduction. The tax deduction is intended to be allowable over time to match the expected income that will be received from the asset. There are nuances in timing, but this is the general idea.

For business assets, Section 167 is subject to the rules in Section 162. Section 162 is the general rule that applies to business assets. Section 162 imposes additional requirements for business deductions.

There are several nuanced rules that try to expand and limit depreciation deductions to reward taxpayers for certain expenses and deny the deduction for others. These rules also allow faster recovery for some expenses but not for others. When a taxpayer places qualifying property in service during the tax year, they may claim both regular depreciation under Section 168 and bonus depreciation under Section 168(k) for qualifying assets. The parties in this case agreed that the depreciation calculation itself was correct regardless of which schedule should have been used.

Business Deductions Under Section 162

The tax code allows taxpayers to deduct ordinary and necessary expenses incurred in carrying on a trade or business. This can be found in Section 162. Section 162 provides the foundation for most business expense deductions.

Section 162(a) allows a deduction for “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” This broad language encompasses various business costs. The requirement that expenses be incurred in “carrying on” a trade or business creates an important threshold test.

Businesses that meet this test can file a separate tax return depending on the type of legal entity and structure. They might file a Form 1120, 1120S, 1065, or other business return. If they are wholly owned LLCs as in this case, they can report the tax deductions on a Schedule C on the taxpayer’s own Form 1040 individual tax return. If the business is not a trade or business, it can still report the same items. It usually has to do so on a Schedule E on the taxpayer’s own Form 1040 individual tax return.

To qualify for Schedule C treatment, an activity must constitute a trade or business with the primary purpose of generating income or profit. The taxpayer must demonstrate a genuine profit motive, regular and continuous activity, and substantial business operations. Courts examine factors such as the manner of conducting the activity, the expertise of the taxpayer, the time and effort expended, and the expectation of profit.

What Qualifies as a Trade or Business?

The determination of whether an activity constitutes a trade or business requires examining the taxpayer’s primary purpose and operational characteristics. The courts have noted that the phrase “trade or business” is not defined in the tax code. This has left courts to develop the definition through case law.

Courts have said that sporadic or passive activities generally do not qualify for trade or business status. This is true even when they involve substantial assets. Courts have said that the activity must be regular and continuous. It must be conducted with a genuine profit motive. It must involve more than mere investment activities.

In this case, the court concluded that the LLC was not a trade or business. This was based on several factors. The entity did not generate revenue. It did not employ workers. It did not provide services to third parties. Its sole function was facilitating the taxpayer’s own business travel. The taxpayers conceded that the LLC was not operated to generate profit.

These facts distinguish this LLC from legitimate aircraft leasing or charter businesses. Those businesses actively market services to customers and maintain profit-driven operations. The absence of commercial activity or profit motive made Schedule C treatment inappropriate for the depreciation deduction.

Understanding Unreimbursed Partnership Expenses

A partnership files its own income tax return. The return generally does not compute tax. It aggregates items of income and expense and then allocates those to the individual partners. The partnership’s return does not function as a report to show the calculation of tax. It shows the net profit and loss to the IRS. The individual income tax returns receive these flow-through items and show the calculation of tax.

This brings us back to the Section 162 expenses here. The partnership tax return can report tax deductions under Section 162. When a partner incurs expenses on behalf of the partnership, they may deduct them as unreimbursed partnership expenses. There are a few other requirements for this treatment. The partnership agreement must require the partner to pay certain expenses from personal funds. The expenses must be ordinary and necessary for the partnership’s business activities. Travel expenses often qualify when partners are required to pay their own transportation costs for partnership business.

The IRS agent in this case did not dispute that these expenses were likely unreimbursed partnership expenses. The agent agreed they were deductible. The taxpayer’s investment firm required extensive travel. He chose to pay private aviation costs rather than accept commercial airfare reimbursements. The partnership agreement required partners to bear their own travel expenses. The depreciation related to business travel could qualify as an unreimbursed partnership expense. The taxpayer had claimed similar deductions in subsequent tax years as unreimbursed partnership expenses.

The Refund Claim & Variance Doctrine

The IRS agent and the taxpayer both were in agreement. The tax deduction would be the same regardless of whether reported on Schedule C or as a flow-through item for an unreimbursed partnership expense. Why did the taxpayer lose its tax deduction here?

The IRS argued that the variance doctrine applied. The court agreed. The variance doctrine comes up in federal tax refund litigation. It prevents taxpayers from filing a refund claim reporting one thing and then taking a different position with the IRS during the litigation for the refund.

This rule is set out in Treasury Regulation 301.6402-2(b)(1). The regulation explains that taxpayers are to “set forth in detail each ground upon which a credit or refund is claimed and facts sufficient to apprise the Commissioner of the exact basis thereof.” The regulation warns that claims failing to meet this standard “will not be considered for any purpose as a claim for refund or credit.” This procedural rule prevents taxpayers from asserting grounds for refund in court that were not properly presented to the IRS during the administrative process.

The doctrine serves administrative purposes. It allows the IRS to evaluate claims intelligently before litigation. It avoids the costs of defending against theories that were never properly presented. The doctrine’s rigid application can produce results that seem to elevate form over substance. This may exceed the regulation’s intended scope.

How This Court Misapplied the Variance Doctrine

The court’s application of the variance doctrine makes little sense given the facts. The doctrine requires that taxpayers provide the IRS with sufficient information to evaluate their claims during the administrative process. Here, the IRS agent explicitly acknowledged that the depreciation deduction was valid under Schedule E. The agent documented this acknowledgment in his examination records. The IRS possessed all the information needed to evaluate the claim.

The court focused on the taxpayer’s original Form 1040X, which simply stated they “inadvertently neglected to claim a depreciation deduction for a business asset purchased and placed in service in 2014.” The court treated this as limiting the taxpayer to only the Schedule C theory. This ignores that the IRS agent understood exactly what was being claimed and acknowledged its validity under a different legal theory.

The court’s reasoning that Schedule E would require examining “different facts” is questionable. The partnership agreement and reimbursement policies were already relevant to the taxpayer’s business travel. The IRS knew about the taxpayer’s consistent treatment of similar expenses in subsequent years. These weren’t new facts that would surprise the IRS.

The variance doctrine prevents unfair surprise and ensures intelligent administrative review. Both purposes were satisfied here. The IRS agent knew the alternative legal theory was correct. The agency possessed all relevant facts. Yet the court still applied the doctrine to bar consideration of the claim.

This approach allows the IRS to have it both ways. The agency can acknowledge during an audit that a taxpayer’s position is correct. It can document that acknowledgment. Then it can argue in court that the variance doctrine prevents consideration of that same position. This contradicts established precedent that the IRS cannot feign ignorance of information it actually possesses.

The court created a troubling precedent where form selection errors can defeat otherwise valid claims. The complexity of the tax system creates these situations. Taxpayers shouldn’t lose legitimate deductions when the IRS fully understands their claims and acknowledges their validity.

The Takeaway

This decision demonstrates how rigid application of procedural rules can prevent taxpayers from recovering refunds they may legitimately deserve. This decision elevates formalistic compliance over substantive fairness and, if the taxpayer were to appeal, it may not survive appellate review. The case does show how taxpayers often have to press the government to reach the right result. The government had many opportunities to do so here. More troubling is the IRS agent’s conduct in this case. The agent knew the taxpayer was substantively entitled to the deduction but chose to deny it based on a form-selection error rather than exercise reasonable discretion. The court did the same–leaving it to the taxpayer to appeal the decision to try to get to the right result.