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To: SeekAndFind
the IRS states that the free meals will now be considered a taxable fringe benefit, the same way a company car or phone is.

An employer-provided cellphone is considered 'listed property' by the IRS. That means you must estimate the percentage of it that will be for business use (and document it). Then you can deduct that percentage. It has to be at least 50% or none of it is deductible.

Here's an example: Say you buy your employee a $500 iPhone. You declare it as listed property with 70% business use. Then the business can deduct 500*.7 = $350 off its taxes as a business expense (actually it's a depreciation allowance modulo Sec 179). During an IRS audit if the records show you over-reported the percentage, they can tax you on the difference and make you pay penalties.

So the article claiming that the IRS wants to consider cellphones 'a taxable fringe benefit' just doesn't make sense from what I understand. I am a small business owner who has been audited over precisely this kind of thing.

It's simply not how the tax law works for company-supplied laptops, tables, cellphones, and similar devices.

I think the article is dodgy.

30 posted on 09/06/2014 5:17:31 PM PDT by Gideon7
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To: Gideon7

RE: During an IRS audit if the records show you over-reported the percentage, they can tax you on the difference and make you pay penalties.

As an aside... why are we giving this agency the power to even audit that? What business is it of theirs how a phone is used up to this ridiculous detail?

Is this still a free country or what? Are we going to be doing business with an eye to make it profitable, or are we going to spend a lot of our time looking over our shoulder in anticipation of a government gotcha audit?

Giving them this power to snoop at tiny details like this is no different from giving the Nazi brown shirts the power to tell you what and what you can do with your property.


32 posted on 09/06/2014 5:25:12 PM PDT by SeekAndFind (If at first you don't succeed, put it out for beta test.)
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