Taxes: "Meals and Entertainment"

So last year my accountant learned me something very interesting. If I have an expense categorized as "Meals and Entertainment" I only get to claim 50% of that as a business expense.

One of the fringe benefits I provide is often buying a nice lunch for the guys (it gets expensive some times...like $20/person....we're not talking fast food here)

So needless to say, my "meals and entertainment" category is significant.

Can I categorize it as something else? I'm not trying to cheat the system. It was explained to me that the idea is that if I'm wining and dining a client- 50% of those expenses are spent on me. But I'm talking 3 or 4 guys (NOT me) out on a meal with the company card. Can that be fully deducted?

love
nick

If you arent cheating the system you are getting cheated. Just write it off as a 'unreimbursed business expense'.... Or just make up the difference in some milage or something.

bonner1040 said:

If you arent cheating the system you are getting cheated.

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Exactly. Last year I ended up spending $2,803 on it. Meaning I paid tax on $1,400. That's a few HUNDRED that the IRS got and didsn't deserve.

Just trying to get a guage on how y'all are handling (or would handle) such a situation.

Collect some jobs in cash and use that for your lunches... no taxes then!

We list it as office expense.

Can you have your safety meeting at that time? Might be able to change categories then...

bonner1040 said:

If you arent cheating the system you are getting cheated. Just write it off as a 'unreimbursed business expense'.... Or just make up the difference in some milage or something.

Click to expand...

I have to disagree with Nick's characterization, if not his sentiment . It's most certainly illegal to "cheat" the system...but it also most certainly legal and proper to use every bit of the law to your advantage.

The end result can be quite a bit different..."cheating" can get you in trouble, and cost you big time. Using legal methods, defensible justifiable interpretations of tax law, to your best advantage is simply wise business management.

Perhaps this is a case of linguistic hair-splitting, but I think not.

So to me, Nick's suggested routes are not without risk, whereas Willie's and Adrian's are pretty safe.

IMO .

Interesting. I'd see the opposite way.

With cash, there is no trail.

If I categorize it as office expense, "the" could ask to see the receipts later and then be like, "so what office supplies are you getting at Guisados Tacos?"

So I guess it boils down to "do you wanna lie or steal!"


love
nick

I agree with Burnham - and more. On a fine point of exposure if you ever go into any important legal proceeding know that all your past electronic communications may be going with you. Case in point the surviving Boston bomber had years of past communications records researched (every form you can think of) to see where his head had been at and for how long.

So given that I love my motherlands IRS... (my attempt at humor). No, my tax guy used to work for the IRS. He trained field agents for 14 years. His metaphor is that it is a game. When he worked for the IRS he played the game as hard as he could for them. Now that he works in the private sector he plays the game as hard as possible for his client. This was born out in spades when I went from my previous, non creative, I don’t want to ever talk to the IRS guy to this new what can be done within the rules of the game type guy.

Tax evasion is illegal, tax avoidance is part and parcel with good business planning and is acknowledged as legal and your right by the IRS. (What can I do that makes good business sense and saves me on tax dollars.) Using the OP as an example I would look for what else those meals or a percentage of them can be characterized as.

Willie’s example is perfect, can it only be seen as a meal or can it be a safety meeting? Can it only be defined as a meal out with the guys, or are you ‘marketing’ the value of a long term work relationship with Tree Care LA? Look at all kinds of alternatives and come up with something that fits (and) you believe in and would be willing to argue the point toe to toe with an IRS auditor. “Listen this is marketing and advertisement. I’m investing in the training of these guys all the time and it makes $ sense that they see me as the place to stay long term” etc.. Find out what you need to do to meet the ‘rules’ of whatever category you choose. (A safety flyer and X amount of time on the topic, a Tree Care LA shirt that you were going to give out on Mon. AM gets held till ‘marketing lunch’).

NickfromWI said:

Exactly. Last year I ended up spending $2,803 on it. Meaning I paid tax on $1,400. That's a few HUNDRED that the IRS got and didsn't deserve.

Just trying to get a guage on how y'all are handling (or would handle) such a situation.

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Last time we talked taxes you wanted to give Uncle Same everything you could. Mileage was the topic. You had enough getting screwed?

Perhaps it's worth revisiting that convo- but I think you might be exaggerating a hair. I don't want to give as much as possible- I want to give what is rightfully owed.

In this case, I don't see how it counts as a 50% expense.


love
nick

I've sat in this guys seminars, he used to teach auditors, cool as heck what he teaches
http://www.taxreductioninstitute.com/

The big thing right now in CA is making sure you claim your out of state and online purchases that had no CA tax on them. I have heard CA is really looking for it these days.

I myself need to step up my tax knowledge. Im due for a good, long sit down with the accountant. I think Im missing stuff that I could be taking advantage of.

I pay a lot of money each year to have a certified accountant do my tax work for me.
But as my first one said: " It's a poor accountant that can't save his client at least as much in taxes, as he costs"

I've pretty much found that to be true over the years.

When at one time the county taxators got into me, it was nice to be able to say: " Why in damnation are you bothering me about that, I'm trying to do some work. Call my accountant"!

My accountant is good, but she is only as good as what I provide her to work with. Her rates are good, and she saves me MANY times what she costs me.

NickfromWI said:

Interesting. I'd see the opposite way.

With cash, there is no trail.

If I categorize it as office expense, "the" could ask to see the receipts later and then be like, "so what office supplies are you getting at Guisados Tacos?"

So I guess it boils down to "do you wanna lie or steal!"


love
nick

Click to expand...

Want to bet on that assertion, my friend?

Nope


love
nick

Learning, I see .

Hahaha...y'all are good.

Nick is especially so...I'm a fan, for sure .

I do the same as y'all. We just pay it, after all, Obama seems a few nickels short anyway...the Muslim brotherhood needs some new fighter jets...

Went to an after hours business seminar open house thing a local bank hosted last year, with a couple of interesting speakers. One of the things that registered in my tired noggin was an accountant saying to pay attention to your meals/ entertainment claims.....Revenue Canada (northern genetic clone of IRS) zeroes in on that stuff. He suggested jotting down on the back of a receipt little details, such as who was present, reason/purpose of meeting, etc.

Burnham said:

Want to bet on that assertion, my friend?

Click to expand...

Burnham said:

I have to disagree with Nick's characterization, if not his sentiment . It's most certainly illegal to "cheat" the system...but it also most certainly legal and proper to use every bit of the law to your advantage.

The end result can be quite a bit different..."cheating" can get you in trouble, and cost you big time. Using legal methods, defensible justifiable interpretations of tax law, to your best advantage is simply wise business management.

Perhaps this is a case of linguistic hair-splitting, but I think not.

So to me, Nick's suggested routes are not without risk, whereas Willie's and Adrian's are pretty safe.

IMO .

Click to expand...

Wouldn't Adrian's and Willie's suggestion both be illegal? ... As well as Bonner's right?

Uhh...no and that's my final answer