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Helping a Rehabbing company handle its contractor expenses

I'm trying to assist setup a new rehabbing company in quickbooks that has several contractors for fixing up houses. These contracts use the company card to pay for their meal expenses and as a way to motivate their team, is allowed by the owner. How am I supposed to treat the meals that are expensed by these contractors?

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Best answer 03-11-2018

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ProAdvisor

Re: Helping a Rehabbing company handle its contractor expenses

Some of the rules for meals and entertainment changed for 2018.  Here is a section from IRS Publication 15-B on meals:



Short meal periods. 

Meals you furnish during working hours are furnished for your convenience if the nature of your business (not merely a preference) restricts an employee to a short meal period (such as 30 or 45 minutes) and the employee can't be expected to eat elsewhere in such a short time. For example, meals can qualify for this treatment if your peak workload occurs during the normal lunch hour. However, they don't qualify if the reason for the short meal period is to allow the employee to leave earlier in the day.

Example.

Frank is a bank teller who works from 9 a.m. to 5 p.m. The bank furnishes his lunch without charge in a cafeteria the bank maintains on its premises. The bank furnishes these meals to Frank to limit his lunch period to 30 minutes, since the bank's peak workload occurs during the normal lunch period. If Frank got his lunch elsewhere, it would take him much longer than 30 minutes and the bank strictly enforces the time limit. The bank can exclude the value of these meals from Frank's wages.



 

 

De Minimis Meals:

 

You can exclude any occasional meal you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. The exclusion applies, for example, to the following items.

  • Coffee, doughnuts, or soft drinks.

  • Occasional meals or meal money provided to enable an employee to work overtime. However, the exclusion doesn't apply to meal money figured on the basis of hours worked, or meals or meal money provided on a regular or routine basis.

  • Occasional parties or picnics for employees and their guests.


Meals after work hours. 

Meals you furnish to an employee immediately after working hours are furnished for your convenience if you would have furnished them during working hours for a substantial nonpay business reason but, because of the work duties, they weren't eaten during working hours.

 

Meals you furnish to promote goodwill, boost morale, or attract prospective employees. 

Meals you furnish to promote goodwill, boost morale, or attract prospective employees aren't considered furnished for your convenience. However, you may be able to exclude their value as discussed under De Minimis Meals , earlier.

 
1 Comment
ProAdvisor

Re: Helping a Rehabbing company handle its contractor expenses

Some of the rules for meals and entertainment changed for 2018.  Here is a section from IRS Publication 15-B on meals:



Short meal periods. 

Meals you furnish during working hours are furnished for your convenience if the nature of your business (not merely a preference) restricts an employee to a short meal period (such as 30 or 45 minutes) and the employee can't be expected to eat elsewhere in such a short time. For example, meals can qualify for this treatment if your peak workload occurs during the normal lunch hour. However, they don't qualify if the reason for the short meal period is to allow the employee to leave earlier in the day.

Example.

Frank is a bank teller who works from 9 a.m. to 5 p.m. The bank furnishes his lunch without charge in a cafeteria the bank maintains on its premises. The bank furnishes these meals to Frank to limit his lunch period to 30 minutes, since the bank's peak workload occurs during the normal lunch period. If Frank got his lunch elsewhere, it would take him much longer than 30 minutes and the bank strictly enforces the time limit. The bank can exclude the value of these meals from Frank's wages.



 

 

De Minimis Meals:

 

You can exclude any occasional meal you provide to an employee if it has so little value (taking into account how frequently you provide meals to your employees) that accounting for it would be unreasonable or administratively impracticable. The exclusion applies, for example, to the following items.

  • Coffee, doughnuts, or soft drinks.

  • Occasional meals or meal money provided to enable an employee to work overtime. However, the exclusion doesn't apply to meal money figured on the basis of hours worked, or meals or meal money provided on a regular or routine basis.

  • Occasional parties or picnics for employees and their guests.


Meals after work hours. 

Meals you furnish to an employee immediately after working hours are furnished for your convenience if you would have furnished them during working hours for a substantial nonpay business reason but, because of the work duties, they weren't eaten during working hours.

 

Meals you furnish to promote goodwill, boost morale, or attract prospective employees. 

Meals you furnish to promote goodwill, boost morale, or attract prospective employees aren't considered furnished for your convenience. However, you may be able to exclude their value as discussed under De Minimis Meals , earlier.