[geomon]

No_worries...I still beg to differ. The following explains it a bit better than I would. The personal expenses part refers to...on a trip, your meal would be a deductable expense, buying your wife or GF a dinner would be a personal expense.

http://www.irs.gov/taxtopics/tc511.html


Topic 511 - Business Travel Expenses
Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses using Form 2106 (PDF) or Form 2106-EZ (PDF) and on Form 1040, Schedule A (PDF). You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.
You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.
Deductible travel expenses while away from home include, but are not limited to, the costs of:
1. Travel by airplane, train, bus, or car between your home and your business destination,
2. Using your car while at your business destination,
3. Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another,
4. Meals and lodging, and
5. Tips you pay for services related to any of these expenses.
Instead of keeping records of your meal expenses and deducting the actual cost, you can generally use a standard meal allowance, which varies depending on where you travel.

[no_worries]

No_worries...I still beg to differ.

That's alright, I'm used to it when it comes to tax and accounting issues :lol: I will admit that I forgot that sole proprietors claim that deduction on Schedule C as opposed to 2106 ops: It's been awhile since I've done a SP's tax filing.

Just to be clear, I'm using "business expense" as it relates to a business's standard cost of operations. You won't find "meal expense" anywhere in a corporation's financials. (Though you will find a few trying to take advantage of loopholes to fool their employees and pass on tax burden through per diem plans.) They're simply not recognized as a cost of doing business because everyone has to eat whether they work or not. That is the easiest way to determine whether something is a business expense or not.

As for the IRS, that section you posted is but one of many dealing with the standard meal allowance. Have you ever seen the audit guidelines covering this subject? There's a lot more underneath the surface.

Let me ask you this; if the intent of the IRS is to treat ALL meal expense on the road as a necessary business expense, why is it necessary to have a tax home in order to claim the deduction? Oh, and a tax home is not just a physical address. For the purposes of claiming travel deductions you must have living expenses at your tax home that are DUPLICATED during your business travel. They're not giving you a deduction simply because you have to eat on the road. They're giving you the deduction because being on the road creates a heavier burden in terms of the cost to eat.

Sorry, it's a little convoluted...I'm exhausted and not terribly clear-headed :?

[sidman82]

It's simple, count up all the days away from home for the year. Take 75% of the $52 a day per diem amount and that is your deduction. 2008 will have an 80% rate on the $52. This amount is written by the IRS.

[Rev.Vassago]

Originally Posted by sidman82

It's simple, count up all the days away from home for the year. Take 75% of the $52 a day per diem amount and that is your deduction.

Or you can skip the percentages and just use $39 per day (which is 75% of $52) :wink:

[DD60]

Originally Posted by Rev.Vassago

Or you can skip the percentages and just use $39 per day (which is 75% of $52) :wink:

Oh crap,we actually agree on something. :lol: :shock: Food is a business expense if you are away from home. All you do is simply count the days logged on the road and use the figure above for deductions.

[no_worries]

How to figure the deduction isn't being questioned, I think everyone understands that. What we're debating is how food ought to be treated pertaining to your company's operating costs.

There's a difference between tax accounting and financial accounting. When you're trying to figure your cost to operate, cash flow, balance sheet, etc., that's financial accounting.

Here's one more test. If you're structured as a corporation but just one person, how would you treat food?

[geomon]

If you're structured as a corporation but just one person, how would you treat food?

I'd still eat it

Not sure but one or the other would be able to write off the meals...anyone a tax expert around here?

[no_worries]

Eat it :lol: very good.

It wouldn't show up on the corporate side...you would deduct it on your 1040 as an employee. So yes, it is a business deduction from a tax accounting standpoint, but it's not a business expense or cost of doing business from a financial accounting perspective. If you are employed as a mechanic you have to buy your own tools. That's simply a cost associated with your profession but it's not an operational cost for the business that employs you. A driver and his food is the same thing. Employee cost, not cost of operation. It just so happens that for a one truck operation, the business and the employee are one and the same. However, as all good small businesspeople should know, you should still keep the two separated.

Alright, I'll put the horse away now :lol: