DO SPOUSES THAT ARE COLLEAGUES QUALIFY FOR BUSINESS DEDUCTIONS?

Larry,

I read your September 18th blog: Eat, Drink, & be Deductible. What if your spouse is a partner in the business? Am I not a professional colleague?

Margaret

Margaret,

I hope that this finds you well. In answer to your question you are correct that your spouse is a colleague and there for qualifies for business deductions. Of course the IRS is always a little perspicuity when looking at related party meals and entertainment therefore we need to make sure we have adequate documentation to "audit proof" the deduction. Also we need to make sure that we are not deducting every meal. An example would be in a recent case where the taxpayer was a legal firm and they had noon meetings and therefore deducted all of their noon lunches (think the television show LA Law). In this court case the IRS won because it was every meal. We want to be aggressive but make sure that you pass the "smell test."

Let me know if you have any other questions.

It is a pleasure serving you.

Larry Kopsa CPA

DEDUCTING MEALS AND ENTERTAINMENT

Meals and entertainment gives us a great opportunity to save taxes but also is an area that we see many mistakes.

The first problem is that many salons do not deduct all of the meals and entertainment that they have coming to them. There are many opportunities that are overlooked. Think about situations with:

• Meals with customers


• Meals with staff


• Meals with stockholders


• Meals with DSC's


• Drinks and expensive meals with your accountant


• Entertainment with any of the above.

The second problem is that many salons deduct meals and entertainment but they don't "audit proof" their deduction with good records. Check out our website for a good summary of the rules: Make the Most of Business Meals/Entertainment. Let me know if you have any questions.

Larry Kopsa CPA