Hello to all, and thank you in advance for any opinions you may have.
I have a partnership (LLC taxed as a partnership) that is owned 50%/50% by two people. Hense they are self employed and not employees. They are in the metal building business. They construct their building within a 50 mile radius of their personal residences. They do not have a separate office.
They travel together in the same vehicle and stop in the mornings for coffee, coke, donuts (or such). Then at lunch they break together and drive to the nearest town for lunch. Many times they will take an afternoon break and get some more coffee, cokes, cookies, etc at the nearby convenience store, and possibly another drink for the ride home. The clients claim they do talk about the current job, (supplies needed, progress, scheduling, billing, need for other help, etc. while traveling and eating/drinking) All charges are put on the partnership's bank card, thereby providing some support. Are any of these cost deductible as 50% meals and entertainment?
people. Hense they are self employed and not employees. They are in the metal building business. They construct their building within a 50 mile radius of their personal residences. They do not have a separate office.
coke, donuts (or such). Then at lunch they break together and drive to the nearest town for lunch. Many times they will take an afternoon break and get some more coffee, cokes, cookies, etc at the nearby convenience store, and possibly another drink for the ride home. The clients claim they do talk about the current job, (supplies needed, progress, scheduling, billing, need for other help, etc. while traveling and eating/drinking) All charges are put on the partnership's bank card, thereby providing some support. Are any of these cost deductible as 50% meals and entertainment?
See the quote below. Basically a business employee can't deduct ordinary eating expenses, unless it's with a client. I could be wrong though.
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Meals
You can deduct the cost of meals in either of the following situations.
It is necessary for you to stop for substantial sleep or rest to properly perform your duties while traveling away from home on business. * The meal is business-related entertainment.
Business-related entertainment is discussed in chapter 2. The following discussion deals only with meals that are not business- related entertainment. Lavish or extravagant. You cannot deduct expenses for meals that are lavish or extravagant. An expense is not considered lavish or extravagant if it is reasonable based on the facts and circumstances. Expenses will not be disallowed merely because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts.
50% limit on meals. You can figure your meals expense using either of the following methods.
Actual cost. * The standard meal allowance.
Both of these methods are explained below. But, regardless of the method you use, you generally can deduct only 50% of the unreimbursed cost of your meals.
If you are reimbursed for the cost of your meals, how you apply the
50% limit depends on whether your employer's reimbursement plan was accountable or nonaccountable. If you are not reimbursed, the 50% limit applies whether the unreimbursed meal expense is for business travel or business entertainment. Chapter 2 discusses the 50% Limit in more detail, and chapter 6 discusses accountable and nonaccountable plans.
by two people. Hense they are self employed and not employees. They are in the metal building business. They construct their building within a 50 mile radius of their personal residences. They do not have a separate office.
coffee, coke, donuts (or such). Then at lunch they break together and drive to the nearest town for lunch. Many times they will take an afternoon break and get some more coffee, cokes, cookies, etc at the nearby convenience store, and possibly another drink for the ride home. The clients claim they do talk about the current job, (supplies needed, progress, scheduling, billing, need for other help, etc. while traveling and eating/drinking) All charges are put on the partnership's bank card, thereby providing some support. Are any of these cost deductible as 50% meals and entertainment?
Is this a joke? Of course NOT! What you have is additional compensation for the partners of which they have no corresponding deduction.
Not unless they can prove that they would NOT have to eat were they not on the job. Seriously, regular meals are just that, regular. If they were home, on vacation, or employed by someone else they would still have to eat. So none of these meals are deductible in any way. That the LLC pays for them makes no difference, they simply get treated as distributions to the members.
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