Magazine & Books Deductions

Well first of all, not ALL magazine and book subscriptions are deductible as business expenses. Trade magazines, manuals and catalogs and the like dedicated to one's line of business would be examples of deductible subscriptions and purchases would be classified as subcription or trade publications expenses. However, subcriptions to your local paper or Newsweek, People mag or the like would not be deductible so the first thing one has to do is distinguish between what is a deductible business expense as opposed to a personal expense which is not deductible, even it they are for use by your customers to pass time until their appointment (as in a doctor's office). David Bemiss, CMA, EA

You are making broad assumtions that are not true.

If you don't want to dump it into "Misc Expenses," you could name it "Reference Material." We have both "Books" and "Dues & Subscriptions" (like for trade organizations, and The Bare Bottom Bunny Club).

I do not endorse the use of an account "Miscellaneous Expenses" by any of my clients. This often results in things that are just, as you say, "dumped" in simply because those believe there is no expense account to charge the expense to. There is always an expense account to charge an expense item. I suggest never using Miscellaneous Expense in your chart of accounts.

As an accountant I always recommend the inclusion of a G/L account called "Miscellaneous", to be used when the client does not know where to post a particular transaction. Naturally when it is my turn to work on the books I make sure any amounts posted to this account are reclassified.

I agree--by having the client post it to misc exp, it allows the client to keep working and we can 'clean it up later'. Plus, it is easier to find when the transactions are all in one place instead of posted everywhere! QB even has an account called 'Ask my Accountant' now!

Michelle L. Long, CPA, MBA Author of: Successful QuickBooks Consulting: The Complete Guide to Starting and Growing a QuickBooks Consulting Business

I worked 6 years for a large regional CPA firm and most of my work was in the healthcare and banking fields. I would issue management letters and one thing I would notice is the comments made after each audit were the same each year. When you make numerous journal entries just to clean up the books in order to audit them, I felt we were auditing our own work. Sometimes the Miscellaneous Expense account was larger in terms of dollar amount than most of the other expense accounts and would get larger each year. Even at that, other accounts would, in some cases, have mispostings to wrong accounts. The mindset of the client was, "just leave it for the auditors, they will take care of it". Why allow the client to just continue to do it incorrectly instead of showing them where it should be posted year after year after year? To me, I want my clients to understand the "whys" of what they are doing, not just doing something with blinders on and never question or scrutinize their work. True, it would be naive to say there is no miscellaneous or sundry items, but they should be nominal in terms of dollars few in number. Educate your clients, don't let them just do it wrong each year. In this way, they will appreciate it more if you 'educate' them on the fly.

Well, of course I agree, with the concept. In actually RUNNING a business, instead of just monitoring its activities, there comes a time when nothing seems to fit. It seems silly to have a G/L account for "Mole remediation."

"Oh you can't put that in with the gardener's bill! That would make our May costs be off as it won't match last year so we can't compare it. You'll have to find some other place for it!" We've all heard that one from a client.

Now if you had selected "earthquake remediation" or "tornado cleanup" we might have something to talk about. Of course "golf tee's" is a more likely thing to really run into. And we know where it really belongs, but you get fired if you put it there. Office expense, the real miscellaneous account.

Seems to me a better name would be "Pest Control".

Common sense is a lot of what accounting is all about.

Of course not, just the ordinary and necessary ones ("necessary" does not mean "indispensable", per IRS Pub 535).

Trade magazines, manuals and catalogs and the like dedicated to one's

Yes, Pub 535 specifically mentions those.

a doctor's

A daily newspaper delivered to a breakfast cafe, Newsweek or People at a fast-oil-change place, general-circulation gossip and style magazines at a hair salon, a TV in a bank lobby showing cable news and entertainment, satellite radio piped into the entire workplace -- I'm curious how in the world you might come up with any or all of these being personal, non-business expenses?

Even if the employees have time to browse the magazines on the job, that's just de minimis fringe benefit with no tax impact.

-Mark Bole

And what if there were no employees? Would you call these a business deduction or something used personally by the business owner?

deductible

in a doctor's

I think you are splitting hairs. Your professional library can be a source of tax deductions. Books, magazines, and journals related to your field can be deducted. Some of your other expenses that may be deducted include union dues, insurance, and professional licensing fees.

Magazines like People, US, Entertainment Weekly have no trade or professional connection whatsoever, yet you may find them in a doctor's office. Others such as magazines related to personal hygiene, childrens health or others similar would be deductible because they are integrally related to the doctor's profession and the health of his customers (patients). Muzak piped into a doctor's office would arguably be deductible because the case can be made it has a calming effect.. Pictures hung on the ceiling in a dentist's office which are deemed to have a calming effect on patient's while receiving treatment also would be deductible. Realistically, these are probably items that get thrown in 'Miscellaneous Expense" anyway.

aps wrote: ...

the health

patient's

I'd say you're the one trying to place too fine a point on it. There's absolutely no reason any magazine subscription for the waiting room of a physician isn't deductible as an expense as it is place there for the placation of clients, not for personal use. The subject matter is immaterial for this purpose.

Professional books, dues, etc., are a different animal entirely.

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Would you [aps] consider the expense of providing free wifi access at a coffeeshop a deductible business expense? After all, it has nothing to do with brewing coffee, nor is it necessary to serve the customers or take their payments.

If "ordinary and necessary" for the business, they are a legitimate business deduction per IRS pub 535. "Ordinary" means common and accepted in your industry, so that test certainly passes for a doctor's waiting room. "Necessary" means helpful and appropriate. If my appointments unavoidably run late sometimes, and providing general-purpose reading material helps placate my clients by giving them something to do instead of wasting time on my account, that is helpful and appropriate and passes the test also.

If I grab one of the magazines to read while eating lunch at my desk, that is a de minimis fringe benefit, whether employee or owner.

Now, if I don't have a customer waiting area associated with my business, then the test probably won't pass. Or, if I subscribe to expensive magazines that are obscure and of little interest to the general public (for example, not found at most newstands or bookstores), that might be challenged. If I subscribe to 300 magazines, that's probably not ordinary.

If I subscribe to the magazines at my home address and then bring them in when I'm done with them, that would be part personal, part business use, and of course the fair market value for deduction purposes at the time I bring the old magazines into the office would be almost zero.

If the magazines have lasting value for collectors and I bring them home after they've been in the waiting room for a while, that's disposition of business assets, let's not go there! ;-)

-Mark Bole

I am a doctor. I go to the bookstore, buy People mag and subscribe for 1 year. How does placing it in my office as opposed to leaving it at home make it deductible?

It does what it does.

aps wrote: ...

Intent and process -- order it as "professional" subscription (much cheaper altho not required) from the business for the waiting room and have it delivered there.

If you have a personal subscription delivered to the house, that's a different animal.