Page Title

Business= Travel, Meals, and Entertainment

= &nb= sp; = &nb= sp; = A deduction checklist

Type of expense &= nbsp; = &nb= sp; = &nb= sp; = &nb= sp; = Deductible percentage

Travel= &nb= sp; = &nb= sp; = &nb= sp; = &nb= sp; 100% 50% 0%

Local business travel…………………R= 30;…………………………&#= 8230;………………..X

Out of town business travel and lodging……………= ………………………...…&#= 8230;…X = ;

Travel as a form of education………………= 230;…………………………&= #8230;…………………………= ;….X

Investment seminar fees, travel, and meal expense………R= 30;…………………………&#= 8230;…………...….X

Meals

Business meals for yourself while away from home

overnight on business= …………………………̷= 0;…………………………= 230;……………….X

Meal with employee, colleague, business contact, customer or

client with business = discussed before, during, or after………………= ;………………………..X

Meal with employee, colleague, business contact, customer or

client with no busine= ss discussion………………………= ;…………………………R= 30;…..……………..X

Lavish and extravagant portion of a business meal………R= 30;…………………………&#= 8230;...……………..X

“Goodwill” or “quiet” business meal, with no busin= ess

discussion…R= 30;…………………………&#= 8230;…………………………= …………………………̷= 0;…….X

Entertainment

Entertaining a client or customer, with significant business

discussion…R= 30;…………………………&#= 8230;…………………………= ………………………....X

Entertaining a client or customer, with no business discussion…̷= 0;…………………………= 230;.………X

Tickets to sporting or cultural event connected with significant

business discussion&#= 8230;…………………………= …………………………̷= 0;………………….X

Business gifts of no more than $25 per recipient………̷= 0;…………………………...= X

Entertaining employees at company picnic, Christmas party, etc…̷= 0;..………………X

Samples and promotional items provided to general public for

business purposesR= 30;…………………………&#= 8230;…………………………= …………X

· Reportin= g Business T & E

&= nbsp; &= nbsp; &= nbsp; &= nbsp; &= nbsp; Generally, business travel remain= s fully deductible, but business meals and entertainment are only 50% deduc= tible.

It is the employer= 217;s reimbursement policy that determines whether it’s the employee = or the employer who must reduce meals and entertainment expense before taki= ng a deduction on the tax return.

If an employee is not= reimbursed by his employer for business expenses, the employee must adjust his meal and= entertainment expenses for the nondeductible portion. His expenses may be = deducted on his tax return only if he itemizes and then only to the extent = such expenses along with other miscellaneous itemized deductions exceed 2% = of his adjusted gross income. In this situation, the employer gets no deduc= tion.

If the employee is re= imbursed by his employer under an “accountable plan,” the employee does not report the reimb= ursements as income nor does he report the expenses as deductions. The empl= oyer in this case deducts reimbursements paid to the employee after making = a reduction for 50% of meals and entertainment.

An accountable plan i= s one in which reimbursements or other expense allowances meet the requirem= ents of business connection, substantiation, and the return of excess amoun= ts.

If the employee is re= imbursed by his employer under a “non-accountable plan,”= the reimbursements are includable in t= he employee’s gross income, are reported as wages on his Form W-2, an= d are subject to withholding and other payroll taxes. Employee business exp= enses paid under a non-accountable plan are deductible (by the employee) on= ly as a miscellaneous itemized deduction subject to the 2% of adjusted gros= s income floor (and subject to the limitations on total itemized deductions= for higher income tax-payers). Meal and entertainment expenses are subject= to the 50% limitation.

A non-accountable pla= n is any plan that fails to meet the requirements of an accountable plan.

Travel, Meals &

Entertainment

2319= N. Andrews Avenue

Fort= Lauderdale, FL 33311

800.= 382.1040

www.= nakedaccounting.com

Business

Deductions

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