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Strategic Issues...Online
For week ending March 9, 2007, Issue #298
Featured Articles:
1.  Deducting Travel, Entertainment and Gift Expenses
2.  Tech Tip Weekly:  Accessing MS Outlook Globally
3.  Compliance Calendar
 
If you would like to have further information on any of these articles, let us know. 
We would appreciate receiving your comments and/or suggestions, anytime!
acarroll@pmcpa.com
 
 1.  Deducting Travel, Entertainment and Gift Expenses
 
The Internal Revenue Service reminds taxpayers that there are specific guidelines to be followed when deducting travel, entertainment and gift expenses.
 
In general, taxpayers may deduct ordinary and necessary business-related expenses for traveling away from home, entertaining clients and customers and giving gifts to customers, employees and others with whom they have a business association.  An ordinary expense is an expense that is common and accepted in the taxpayer's trade or business.  A necessary expense is one that is appropriate for the business.
 
Taxpayers who deduct these expenses must exclude personal expenses when computing their deductions and must have documentation for the expenses, including statement of the business purpose, names of the persons being entertained, date and location.  In addition, generally only 50 percent of business meal and entertainment expenses can be deducted.
 
Travel
Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses.  Taxpayers are considered "traveling away from home" if their duties require them to be away from home substantially longer than an ordinary day's work and they need to sleep or rest to meet the demands of their work.  The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced recordkeeping requirements.  Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation.  Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable.
 
Entertainment
Expenses for entertaining clients, customers, or employees may be deducted if they are both ordinary and necessary and meet one of the following tests:
 
-Directly-related test:  The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time.
 
-Associated test:  The entertainment was associated with the active conduct of the taxpayer's trade or business and occurred directly before or after a substantial business discussion.
 
Gifts
Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business.  In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year.
 
2.  Tech Tip Weekly:  Accessing MS Outlook Globally
 
You can use three ways to access your MS Outlook data from anywhere in the world.
  • You can carry your MS Outlook folder on a memory card or CD-ROM and open it offline on any computer that has MS Outlook.
  • When you employ an MS Exchange server for your business, you can access your online information by connecting and opening your MS Outlook Web Access (OWA) page and working online.
  • You can carry MS Outlook on a device like your Notebook, PDA, or cell phone, thus allowing you to open the information online or offline.
3.  Compliance Calendar
 
March 9
-Employers deposit Social Security, Medicare and withheld income tax for March 3, 4, 5, and 6.
 
-Employees who received $20 or more in tips in February report them to their employers.
 
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Prangley Marks, LLP
Accountants & Consultants
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