Meal Expenses not Subject to 50% Rule

By David Duner, CPA

Click Image

There exist several exceptions from the rule requiring taxpayers to reduce their otherwise allowable meal and entertainment expenses by 50%. The common rationale for the exceptions is that the taxpayer is unlikely to derive much personal benefit in the situations exempted from the percentage reduction rule.  The exceptions are for:

• expenses treated as compensation paid to an employee (and subject to withholding tax), or otherwise included in the gross income of the recipient;
• reimbursed expenses, but the percentage reduction rule applies instead to the person making the reimbursement;
• expenses for certain traditional recreational activities for employees, e.g., Christmas parties, summer picnics, etc.;
• expenses for services or facilities that are made available to the general public, e.g., promotional tickets or samples provided to customers;
• expenses for goods or services sold to customers in bona fide transactions for adequate consideration, e.g., the food costs of a restaurant;
• food or beverage costs excludible from the recipient’s gross income as a de minimis employee fringe benefit;
• the cost of tickets to sports events arranged for the primary purpose of benefitting certain charitable organizations.

Posted By Ron Siegel  

Cick Image for AccessArticles and information other readers found interesting: Home Office Deductions – Explained Fannie Mae Offers New Incentive for Fannie REO Buyers (Home Path) Purchase a Home for $2M, Borrow $1.5M, 3.54% AND Close in 14 Days? The Low Down – On Low Down Payments FHA – The Second Time Around Should We File Foreclosure, Short Sale, or Deed In Lieu of Foreclosure After Bankruptcy? Uninsured Motorists – A Growing Problem in California Is Your Golden Retriever on the “bad” dog list? Negative Equity in Automobile Loans Treated as Unsecured Debt Gas Savings Tips That Don’t Actually Work 10 Ways to Guard Against Identity Theft When Traveling Real Estate Radio Show Archive Video Introduction to Ron Siegel Click Image for Consultation

Ron Siegel is a Radio Show host on the Real Estate Radio Network and counsels clients in all matters Real Estate Related – Mortgage Banking, Real Estate Purchases and Sales, Short Sales, Foreclosures, Credit Repair.  Reach on Ron Siegel at Ron@MBEhoa.com – 800.306.1990 – www.MBEhoa.com.

Tagged as: We The People