Blog from Anthony Giannette, CB

Due to massive misunderstanding with company owners about how to expense meals, this article has been pulled from the IRS website to assist. There are two occasions when expensing food and beverages are acceptable:

1. As meals, entertainment, and gifts. This is effective when a future profit is implied. Customers, clients, and colleagues meet for common endulgence. Deduct 50%.
2. As meals, entertainment and gifts as a party for all employees of a department or company. Deduct 100%.

Meals and lodging. You can usually deduct the cost of furnishing meals and lodging to your employees. Deduct the cost in whatever category the expense falls. For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Deduction limit on meals. You can generally deduct only 50% of the cost of furnishing meals to your employees.

However, you can deduct the full cost of the following meals.

Meals whose value you include in an employee’s wages. “–not the best use of company funds“–Tony.

Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. “Basically, pocket change used to provide for an employee’s well-being.”-Tony

Meals you furnish to your employees at the work site when you operate a restaurant or catering service.

Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. “General rule here is ALL employees must be invited. My clients have found increased morale when engaged thusly.“–Tony

Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). This does not include meals you furnish on vessels primarily providing luxury water transportation.

Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska.

———————————————————————————————————————–Employee benefit programs. Employee benefit programs include the following.

Accident and health plans.
Adoption assistance.
Cafeteria plans.
Dependent care assistance.
Educational assistance.
Life insurance coverage.
Welfare benefit funds.

You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc.). Taken from http://www.irs.gov/publications/p535/ch02.html#en_US_2011_publink1000208677

Are you one of the millions of Americans who own rental property? Do you enjoy filling out lots of extra tax forms? If so, you’re in luck!As reported by the Examiner’s Susan Ferrechio, a provision of the Small Business Jobs Act passed by Congress last fall mandates that rental income be subject to the same tax reporting requirements as a business or trade.Thus, rental income recipients making payments of $600 or more to a service provider in the course of earning rental income are required to provide an information return (typically, Form 1099-MISC, Miscellaneous Income) to the IRS and to the service provider.

Pasted from <http://askmikebutler.com/new-tax-law-creates-big-headaches-for-rental-property-owners/>

As an astute bookkeeper and student of Accounting, I have been saying for years that business owners should embrace the information reporting requirement and apply it across all vendors regardless of whether their services are provided as an employee replacement contractor or not. Now rental property must report to the IRS and to the vendors. Do you know how tough it is to convince big stores to provide 1099 information? Oh boy is this going to be a busy year!