Employee Relations???

[Jiggers]

In the agricultural industry, it is common at the end of the day or at the end of the work week, to buy beer and soft drinks for the workers in the field.

The workers may be employees or "contract" workers, and a combination of both.

The work being done may be building/repairing fences, moving cattle, building poultry houses, feeding cattle, and all related work.

Usually runs about $30 - $50 per week.

Ocasionally the ranch owner picks up a large box of chicken or BBQ for the workers in the field as most, if not all, didn't bring their lunch and have no way of getting back to town for a meal.

The ranch owner usually partakes.

Are these 100% deductible as "Employee Relations" on the Schedule F?

[BOB W]

In the agricultural industry, it is common at the end of the day or at the end of the work week, to buy beer and soft drinks for the workers in the field.

The workers may be employees or "contract" workers, and a combination of both.

The work being done may be building/repairing fences, moving cattle, building poultry houses, feeding cattle, and all related work.

Usually runs about $30 - $50 per week.

Ocasionally the ranch owner picks up a large box of chicken or BBQ for the workers in the field as most, if not all, didn't bring their lunch and have no way of getting back to town for a meal.

The ranch owner usually partakes.

Are these 100% deductible as "Employee Relations" on the Schedule F?

I always look to the IRS's dictate> "Ordinary and Necessary". Most times deductions like this just don't fly. Although, overtime dinners I have heard do fly.

Sorry for busting in on your thread with no positive posistion on your question. I'm sure other will contribute a better response.

[Skate1968]

I understand meals to be 100% deductible if bought for employees at their place of work.

So chicken and barbeque fed to workers in the field during thier break-- 100% deductible.

De minmus fringe benefits. Meals provided on the employer's premises for employer's convenience, if more than 50% of the employees are furnished meals for the employer's convenience (IRC *119). -Quickfinder

I'm less certain of the after-work refreshments.

EDIT good question, i'm curious to see how others view this

[erchess]

Deduct it

I would deduct all of it because as Jiggers noted it is a common industry practice. The fact that the owner partakes is not a problem so long as he eats no more than the others do and so long as any leftovers are thrown away or go home with workers instead of the business owner.

[Lion]

Usual and necessary

I don't see soda and beer on a Friday afternoon out in the field as any different than soda, water cooler, and hot coffee perking in a break room in an office, maybe donuts on Monday morning or at that morning staff meeting. Even the occasional bucket of chicken, especially with no eating facilities nearby, on the farm sounds like it's for the convenience of the employer to me. As long as the employer is feeding the majority of workers, and especially since you say it's usual in that area, I'd consider it a business expense. Of course, I've never had to defend such at audit. Is the farm making a profit? If the farmer is less nice to his employees, will they leave him for more generous employers?

[taxea]

Employee Relations???

I would suggest with your client that he substitute the alcohol with soft drinks and the after hours with lunch. Once the workers are done, how would this be for the company's convenience? If this is common in this business then the lunch would definately be justifiable. At the end of the day, I'm not so sure I could justify it. It can be expensed as supplies at 100%.taxea

[AuditorTurnedGood]

actually, according to SB7-6 in TTB:

As long as the meals on the business premesis (sounds that way) and they are for the convenience of the employer, they are deductible and excludable. The two convenience tests out of the 4 that seem most applicable here are:

1. Meals are furnished immediately after work because the employee did not have time to eat during normal working hours due to his or her duties.

2. The employee could not otherwise eat proper meals in a reasonable amount of time because there are insufficient eating facilities near the place of employment.

[Skate1968]

I was thinking the same thing as TaxEA. How could employees drinking beer after work possibly be for the convenience of the employer. That's not to say that you can't take 100%. It's just that you'd have to use a different defense. Maybe it the same rule that allows employers to deduct 100% of employee christmass parties & picnics.

[AuditorTurnedGood]

I can see

your point. I suppose I got hung up on the occasional meal being provided. I would agree with the de minimis rule to exclude the beer as an excluded benefit. I could ask my wife what her company does, they still have in office happy hour every Friday.

[erchess]

Beer

I don't think the beer is for the convenience of the employer but I do think that in this industry it is ordinary and necessary because every business has to keep the employees feeling that the employer treats them as well as other employers in the same industry do.

Let's look at it this way - the employer could theoretically satisfy the employees by giving them money to buy beer and perhaps a ride to the bar or store where they will buy it. But the money would end up being taxable to the employees and the fact that they don't actually pay tax goes right over their heads. Besides that what does each beer cost, two dollars? The gift of a beer that costs two dollars is generally perceived as a more friendly gesture than the gift of two dollars. If you doubt that, then arrange to meet one of your web board friends at some kind of convention. Tell them when you meet them that you have been looking forward to the meeting and you want to give them two or even ten dollars. But they will be pleased if you tell them you want to take them to the hotel bar and buy them their beverage of choice.

And if you have a problem with the beer then understand that to these field workers a beer is the traditional drink to share with a friend. It takes the place that in your life is most likely held by coffee, tea, a latte, or perhaps another alcoholic drink.

[JohnH]

So when can I expect to get my Triple Venti Caramel Macchiato at Starbucks?

[Jiggers]

Starbucks?

So when can I expect to get my Triple Venti Caramel Macchiato at Starbucks?

When you complete 10 hours moving dead chickens out to a landfill!

There is no expensive beer as it is bought at the local Stop 'n Rob.

Thanks for the answers.

The farmer is very profitable, annual expense for the after hours get-together is about $2,500.

[ChEAr$]

Even though

Jiggers seems to have ended the thread with his thanks, I'm going to chime in and say
if expense is within business hours, then 100% deductible, but if after the work is done and
the workers are done and free to go home, it's entertainment and therefore 50%.

As for the owners, pro rate the deduction.