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07-17-2013, 11:14 AM
| Junior Member | | Join Date: Jul 2013
Posts: 6
| | Travel Expenses I recently had my first meeting with an IRS Manager and Agent. One issue I had is they denied some travel expenses. The ones they denied were when I took a colleague with me. I am a salesperson and on occasion I take a rep with me who is better versed in the product or has a better relationship with the buyer. On some occasions, I purchased the flight and hotel for this person to travel with me. The IRS claimed that this was not deductable unless I 1099'd the person. I found this hard to believe. Is this a fact? |
07-18-2013, 04:29 AM
| Moderator | | Join Date: Oct 2010
Posts: 5,258
| | In general I guess it depends; you , as an ER of the rep, pay for travel expenses, or reimburse the rep, as your EE, either reg W2 EE or 1099 EE, then you can get to take the deduction on the travel expenses ,ordinary and necessary expenses , that you pay for th e rep.
NOTE; If other individual goes with you (or your EE) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. You can deduct the travel expenses of someone who goes with you(1) if that person is your EE as said above(2) Has a bona fide business purpose for the travel, and(3) would otherwise be allowed to deduct the travel expenses. If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. A business associate is someone with whom you could reasonably expect to actively conduct business. A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. |
07-18-2013, 09:35 AM
| Junior Member | | Join Date: Jul 2013
Posts: 6
| | Quote:
Originally Posted by Wnhough In general I guess it depends; you , as an ER of the rep, pay for travel expenses, or reimburse the rep, as your EE, either reg W2 EE or 1099 EE, then you can get to take the deduction on the travel expenses ,ordinary and necessary expenses , that you pay for th e rep.
NOTE; If other individual goes with you (or your EE) on a business trip or to a business convention, you generally cannot deduct his or her travel expenses. You can deduct the travel expenses of someone who goes with you(1) if that person is your EE as said above(2) Has a bona fide business purpose for the travel, and(3) would otherwise be allowed to deduct the travel expenses. If a business associate travels with you and meets the conditions in (2) and (3) above, you can deduct the travel expenses you have for that person. A business associate is someone with whom you could reasonably expect to actively conduct business. A business associate can be a current or prospective (likely to become) customer, client, supplier, employee, agent, partner, or professional advisor. | What does "EE" and "ER" stand for? |
07-18-2013, 09:39 AM
| Moderator | | Join Date: Oct 2010
Posts: 5,258
| | Quote:
Originally Posted by hollywoodg What does "EE" and "ER" stand for? | EE stands for an employee; ER means an employer; sorry for the confusion~~ |
07-18-2013, 10:01 AM
| Junior Member | | Join Date: Jul 2013
Posts: 6
| | Quote:
Originally Posted by Wnhough EE stands for an employee; ER means an employer; sorry for the confusion~~ | So problem. Thank you for clarification. Now, based on your comments, let me be clear that my rep had the relationship with the customer and a meeting would not have taken place without him. His knowledge of the product and sales was essential to making the pitch. Therefore, the rep meets the criteria you posted (2 & 3). In addition, the rep is a corporation. That being said, did I have to 1099 him or not? |
07-18-2013, 10:15 AM
| Moderator | | Join Date: Oct 2010
Posts: 5,258
| | Quote:
Originally Posted by hollywoodg Now, based on your comments, let me be clear that my rep had the relationship with the customer and a meeting would not have taken place without him. His knowledge of the product and sales was essential to making the pitch. Therefore, the rep meets the criteria you posted (2 & 3). In addition, the rep is a corporation. That being said, did I have to 1099 him or not? | then you , as a biz, need to issue 1099 to UNLESS he is an S corp/ a C corp; as you are operating for the purpose of making a gain or profit, you have a trade or business, then, you must Issue 1099-MISCs if you have paid $600 or more to an individual or partnership, LLC (or certain corporations,i.e., personal service corp/ medical corp I guess) or have paid $10 or more in royalties. So, you do not need to report payments made to corporations for services, except for payments to corporations that provide legal or medical services. You may treat a payee as a corporation if the payee's name contains an expression of corporate status, such as 'Corporation','Corp.', 'Incorporated' or Inc., but not 'Company', 'Ltd.' or 'LLC' | |
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