Thursday, October 21, 2010
Everybody's got to eat.
(Things are going well using your system, keeping everything organized for my indie tax preparer at year's end. Although I did break down and open a free business checking account because I didn't want to be paying vendors from the joint, home account. Still, I figure it's the tracking and not the checking account that is going to matter.)
Here's the question for the blog:
I'm confused on where to categorize costs for luncheons that I attend for service organizations (i.e., Kiwanis) and professional organizations. I know the memberships are deductible, but how to classify the weekly meeting costs?
Also, in general, can one categorize fees for attending any networking events - where meeting people for business leads is the objective - as an advertising expense?
Thanks - Ron in Long Beach, CA
Good. Happy to hear that you are following through with my recordkeeping system. I love success stories. And you are correct: It's the tracking not which checking account that matters.
When attending a business meeting where lunch is served you cannot deduct as a business expense the cost of your lunch. Were you to pay for the lunch of a a business colleague as well as for your own then you would be allowed to deduct the cost -- but only 50%.
The reasoning from the IRS: You'd be eating lunch anyway so the cost of your lunch is not really a cost of business.
Fees for any networking event can be categorized as advertising; or as dues if you pay a yearly fee. Remember to include transportation costs to and from the event.
I see from your site that your business works with local and community policy. You might want to take a look at the piece I wrote for New Mexico Business Weekly on deducting lobbying expenses.