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Old 08-24-2016, 02:40 PM
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C-Corp: Meals & Entertainment Writeoff & Receipts

Hello,
Not sure if the state matters, but this is for a small Start-up business in a Portland, OR location. We have a a decent amount of meals & entertainment, along with travel meals. I have receipts for some, but not all. Additionally, I lack details of attendants for prior receipts. New procedures are in place to stop this from happening again, but I do have 6 months of charges (100 transactions under this category) that lack these details.
Questions:
I read we do not necessarily need meals & entertainment details as long as receipts are under $75 each...Is this true? Or is there an amount limit I should keep in mind for audit purposes? Either per receipt, or for the entire year as a whole?

What happens if I do lack receipts or details for meals, entertainment, and travel meals? Should I NOT categorize them, or "write them off" because I lack receipts?

Just want to make sure I have this topic covered in the event we do get audited. Compliance is a priority. Thanks!



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Old 08-24-2016, 07:05 PM
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Posts: 5,085
Hello,
Not sure if the state matters, but this is for a small Start-up business in a Portland, OR location. We have a a decent amount of meals & entertainment, along with travel meals. I have receipts for some, but not all. Additionally, I lack details of attendants for prior receipts. New procedures are in place to stop this from happening again, but I do have 6 months of charges (100 transactions under this category) that lack these details.
Questions:
I read we do not necessarily need meals & entertainment details as long as receipts are under $75 each...Is this true?=====> basically, your entertainment expenses must be reasonable;the IRS won?t let you deduct entertainment expenses that it considers lavish or extravagant. There is no dollar limit on what is reasonable; nor are you necessarily barred from entertaining at deluxe restaurants, hotels, nightclubs, or ?resorts. Whether your expenses will be considered reasonable depends on the particular facts and circumstances, say, a $250 expense for dinner with a client and 2 business associates at a fancy restaurant would probably be considered reasonable if you closed a substantial business deal during the meal. Because there are no concrete IRS rules , you need to use your common sense. Since
you?ve formed a C corp and the corp pays for your entertainment expenses, the corp deducts the expenses on form 1120.

Or is there an amount limit I should keep in mind for audit purposes? Either per receipt, or for the entire year as a whole?====>no I do not think so; aslongas the IRS has a question about a deduction, you may be asked to supply documentation to support your deduction claim, which is why many taxpayers choose to keep receipts.

What happens if I do lack receipts or details for meals, entertainment, and travel meals? If you deduct meals and entertainment , you need receipts with the name of the establishment you visited, the date you were there and the amount you spent. A cancelled check cannot serve as evidence of your corp expenditure by itself. You must have additional documentation to prove it was a biz expense. A bill for a service or product can serve as proof of an expense. You may ALSO present electronic records to support your claims for expenses. This can include images of cancelled checks, as well as scans of receipts, invoices and bills. The IRS will accept your accounting records that are entered on a computer instead of in accounting books.

Should I NOT categorize them, or "write them off" because I lack receipts?===>>as mentioned; youhave none of them, then no way to claim the expenses; i guess you may contact an EA/a CPA doing taxes in your local area fo rmore professinal help.



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Old 06-10-2018, 11:29 PM
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