Have a Tax Question? Ask a Tax Expert
If this is for marketing ... if these are sales presentations ... then this should be 100% deductible
Don't present this to IRS as a lunch, that's probably where the problem started ... it should be documented as a business presentation where you provided the meal as part of the package
Here are some places where the cost is 100% deductible:
Employee Parties: Meals and entertainment provided primarily for the benefit of rank and file employees are 100% deductible. Think company picnics, banquets, holiday parties, that sort of thing. If you are self-employed, including 2-person partenrships, with no employees, then your function still falls under the 50% rule.
Office Snacks: The cost of providing free coffee, soda, bottled water, donuts, fruit, etc to employees to be consumed at the office are 100% deductible.
Office Meals: Meals served at the office are 100% deductible if there is both a valid business reason and are primarily for the convenience of the employer (such as dinner provided so that employees can work late and meet that important deadline, or lunch served during a work meeting or employee training).
Steak at the 19th Hole: Meals served as part of a charity sporting event are 100% deductible if volunteers put on the event, and the proceeds go to a 501(c)3 charity. Dinners served at golf tournaments are the classic example here.
There's No Place Like Home: If you hold a business function at your home, for employees or for business prospects where you might give a sales presentation or a seminar, you can take a 100% deduction if you can properly document the purpose of the event and the attendees.
The last one is, I'm guessing, closest to your situation
He is giving presentation for new items. He specializes in teachers. And sells insurance and investing products/services. So yes I would say it would be marketing. We listed it as meeting expense and the agent is not wanting to allow 100%. Any advise as to where I could find a ruling or something to prove our point.
Yes, this is simply a section 162 (ordinary and neccessary) - especially in HIS business - marketing expense ... let me see what I can get for you, but simply7 documenting that this was a sales presentation should be enough
just a sec:
Yes the last option would probably fit the best. Is there somewhere where I can pull a ruling or regulation ?
Here's the basic statute law from Internal Revenue Code TITLE 26, USCA
What this will turn on is showing that this is ordinary and neccesary ... his being paid on commission AND the fact that these presentations are a convention in his business is enough
The problem here was listing it as meeting expenses ... this was advertising, marketing, a line item business expenses befor business expense on hos (schedule C, I'm guessing)
I presented dinner seminars for American Express Financial Advisors for Years. The advisor always deducted all costs, never a problem ... VERY conventional in that business
Yes. It should and will be in the future listed as marketing expense. I will try to look this up so I can print it out and submit it to the IRS with a written explanation as to how this works. I appreciate your help tremendously. Hoping this will be enough for the IRS.
Thanks for your assistance. Do you know if there is anyway to print out what you have told me?
It will be ... just be sure to stick on the §162 ordinary and necessary piece .. also gather a little data (don't think you'll need it) backup of the fact that this is expencted of the agent to drive commissions and ordinary in the business
Yes, just file print from your browser OR, after you rate, just save this as a favorite (bookmark(
Hey he also gives away tickets to sporting events, Cardinal baseball games and college football, does not attend himself, do you think these should be 100% deductible.?
Yes IF he gives them away (and the best practice would be to document this as advertising as well) with the expectation of generating clients and commissions from those clients
Just be sure to call it what it is... advertising
Is this person a sole proprietor? (Schedule C)
Here's a direct quote for IRS publication 535:
Advertising expenses. You generally can deduct reasonable advertising expenses that are directly related to your business activities. Generally, you cannot deduct amounts paid to influence legislation (i.e., lobbying). See Lobbying expenses, later. You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U.S. Savings Bonds, or to participate in similar causes is usually deductible.
Key statements there are (1) You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future ... and ... (2) You generally can deduct reasonable advertising expenses that are directly related to your business activities
Yes he is a sole proprietor. We listed this as promotional. Again another goof on our part I guess. Any ruling or code on this?
This is all part of IRC §162 Ordinary and Necessary ... (that's the tax law) ... and the underlined statements above are the IRS publications that reflect it. Again, fro IRS pub 535: Key statements there are (1) You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future ... and ... (2) You generally can deduct reasonable advertising expenses that are directly related to your business activities
If yuu look at his schedule C, you'll see that ADVERTISING is the first line item of section II (regular expenses that come out before profit) ... there's no adjustment
Line 8, I believe
Here's another supporting citation:
Ok thanks a lot. I need to look up and print out some of this to get ready for IRS again. Thanks you have been really helpful.
Heres one more:
1.Treas. Reg. § 1.162-1(a).
Go get em
See the explanation in PLR(NNN) NNN-NNNNat
"Section 274(n)(2) provides that the provisions of § 274(n)(1) shall not apply to any expense if such expense is described in § 274(e)(2), (3), (4), (7), (8), or (9). Section 274(e)(7) provides that subsection (a) shall not apply to expenses for goods, services, and facilities made available by the taxpayer to the general public."