Meals Tax deductions at 50% or 100%

[Bill Briscoe]

Which deduction do most rehabbers use when providing water, snacks, pizza, beer, etc for their work crews (family, friends, etc) on the jobsite?

I had always used the 50% deduction in other businesses, but according to this site, it looks like jobsite food/beverages can be 100% deductable:

http://www.taxalmanac.org/index.php/Meals

"100% DEDUCTIBLE Office Snacks - coffee, soft drinks, bottled water, donuts, and similar snacks or beverages provided to employees on the business premises. "

and "Meals provided on the employer's premises to more than half of the employees for the convenience of the employer. Translation: if you are providing meals to the employees in order to keep them working late, working weekends, or being on call, it is for your convenience to have them at work and the meal is a means of enticement. "

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Would you enter this under the meals deductions or under Office Expense or Supplies?

[Bill Walston]

Originally posted by Simon W.:

I presented this to my other accountants (CPA) friends and they said what I said.
..........

Ok, say that I am wrong

what would you debit and what would you credit?

Sorry but I have never seen COGS be used together with food/snack/beverage expense. COGS is usually dealt with purchases and inventory, not meals.

If you are rehabbing the place, you are providing materials, you shouldn't be mixing up COGS with material and coffee.

@Simon W. , I have no doubt that "they" said what you said. But your friends' answers may well have depended on how you phrased the question. Were they asked "where do you deduct coffee and donuts?" Or were they asked the more appropriate "Where do you deduct food items provided to sub-contractors on the job site?"

And I would debit a "Subcontractor Expenses: Other" account and credit cash or the appropriate payable. IF these items were provided to my OFFICE staff then I would be more inclined to agree with you. But they are not. They are provided on a specific job site to subcontractors rehabbing a specific property (an inventory property). And the fact that YOU have never seen it done this way doesn't mean that it's not done. In over two decades of dealing with my own real estate investing and that of my clients I have seen these expenses handled exactly the way that @Steven Hamilton II and I have described to you. At the end of the day it's an immaterial item, so you classify it as you wish. We'll do the same.