Funeral Expenses

[nalawson]

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]

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

[erchess]

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.

[ChEAr$]

many expenses

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.

[erchess]

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.

[Bees Knees]

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.

[nalawson]

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