Client has been involved in a multi level marketing company for a couple of years now. It is an internet travel business (YTB). You also make money by getting people to sign up to be travel agents under you.
She has been working extremely hard to make this work with very little success. She has done exactly like they tell people to do. They went on one cruise as they were instructed so that they could vouch for quality of cruise line. They also hand out their cards and talk to people all the time about their website. They were told that they could deduct the cost of their meals when they go out as long as they talk to people about their travel business.
So she has given me a total of 1018 for meals and entertainment.
Now in my opinion and understanding of tax law, if they take someone out to a restaurant for dinner for the express purpose of trying to get their business, that would be deductible. But if they just go to Chili's for supper and talk to people they meet in the restaurant about their travel business and give them a business card, I wouldn't consider that a deduction.
If that were the case, all our meals we eat out would be a tax deduction. I can give out my business card to someone everything I go in a restaurant and ask if they need their taxes prepared or do they need bookkeeping services or know someone that does.
What is your opinion? Backup for your opinion? How would you explain this to the client?
Thanks Linda
She has been working extremely hard to make this work with very little success. She has done exactly like they tell people to do. They went on one cruise as they were instructed so that they could vouch for quality of cruise line. They also hand out their cards and talk to people all the time about their website. They were told that they could deduct the cost of their meals when they go out as long as they talk to people about their travel business.
So she has given me a total of 1018 for meals and entertainment.
Now in my opinion and understanding of tax law, if they take someone out to a restaurant for dinner for the express purpose of trying to get their business, that would be deductible. But if they just go to Chili's for supper and talk to people they meet in the restaurant about their travel business and give them a business card, I wouldn't consider that a deduction.
If that were the case, all our meals we eat out would be a tax deduction. I can give out my business card to someone everything I go in a restaurant and ask if they need their taxes prepared or do they need bookkeeping services or know someone that does.
What is your opinion? Backup for your opinion? How would you explain this to the client?
Thanks Linda
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