Funeral Expenses

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  • nalawson
    Member
    • Mar 2008
    • 51

    #1

    Funeral Expenses

    I have a client who thinks his corp can deduct funeral expenses he paid for one of his employees children. I don't see any deduction possiblilty?????
  • thomtax
    Senior Member
    • Nov 2006
    • 1276

    #2
    Possibly

    If it is a non-owner of the corporation, I think the corporation could deduct the expenses paid but this amount will have to be shown as income to the employee.

    LT
    Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

    Comment

    • erchess
      Senior Member
      • Jan 2007
      • 3513

      #3
      In My Mind

      If this guy wants to claim a tax benefit for paying funeral expenses he CAN do that but he needs to set up an employee benefit plan that pays for funerals under certain conditions. I would be caught making the plan retroactive. It would also be my guess that the funeral is a Taxable Fringe Benefit. The point is that such a plan would be good for employee morale and boost employee retention

      One of the great advantages of being in business in the US is that about any expense for which you can argue a benefit to the business can be deducted as long as the business is still showing a healthy profit.

      Comment

      • ChEAr$
        Senior Member
        • Dec 2005
        • 3872

        #4
        many expenses

        Originally posted by erchess
        If this guy wants to claim a tax benefit for paying funeral expenses he CAN do that but he needs to set up an employee benefit plan that pays for funerals under certain conditions. I would be caught making the plan retroactive. It would also be my guess that the funeral is a Taxable Fringe Benefit. The point is that such a plan would be good for employee morale and boost employee retention

        One of the great advantages of being in business in the US is that about any expense for which you can argue a benefit to the business can be deducted as long as the business is still showing a healthy profit.
        may of course benefit a business, but not all fall under the ordinary and necessary test.
        ChEAr$,
        Harlan Lunsford, EA n LA

        Comment

        • erchess
          Senior Member
          • Jan 2007
          • 3513

          #5
          I was taught and still believe

          that you can normally get by with any expense if the examiner can understand why the expense helped you make more money than you would have made without it.

          Comment

          • Bees Knees
            Senior Member
            • May 2005
            • 5456

            #6
            Originally posted by ChEAr$
            may of course benefit a business, but not all fall under the ordinary and necessary test.
            Paying funeral expenses for employees, employee's spouse, and employee's dependents could be considered ordinary and necessary under Section 162 as an employee fringe benefit. No different than paying for group life insurance, disability insurance, health insurance, or bicycle commuting.

            Since funeral expenses are not a tax free fringe benefit, the FMV of the benefit is reported in box 1 of the W-2 as taxable wages to the employee. Any taxable fringe benefit paid to an employee is deductible by the employer.

            Comment

            • nalawson
              Member
              • Mar 2008
              • 51

              #7
              Thanks for all of your responses. Always a learning experience.

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