Realtor Expenses

[S T]

I am working on a return for a realtor, Schedule C - commerical real estate - sole proprietor.

Within the "actual receipts" I have client lunches/dinners, so that is okay, 50% limit
I have receipts for gift cards for clients to places like Olive Garden, Mimi's, etc. Would you limit those receipts to Gifts limited to $25 each, Promotions at 100% (I doubt and what is Promotional Expense?), or it be Entertainment 50%. Thery were purchased as thank yous either for a client that transacted business, or a referral. All gift cards are either $50, $100 or $150 in denomination.

Then while I am at it, I have several monthly Chapter "Luncheon Meetings" so those would be limited to the Entertainment 50%? Meeting fee and lunch, but the amount is not separately stated.

It is amazing what you "actually see" when you have the receipts, instead of having the client just give you a total for business expense These items have always been an issue for me, that is why I am asking so I can advise the client in the future to best spend his money for the most tax dollars and also for the client to be in tax reporting compliance.

Thanks,

Sandy

[Zee]

I am working on a return for a realtor, Schedule C - commerical real estate - sole proprietor.

Within the "actual receipts" I have client lunches/dinners, so that is okay, 50% limit
I have receipts for gift cards for clients to places like Olive Garden, Mimi's, etc. Would you limit those receipts to Gifts limited to $25 each, Promotions at 100% (I doubt and what is Promotional Expense?), or it be Entertainment 50%. Thery were purchased as thank yous either for a client that transacted business, or a referral. All gift cards are either $50, $100 or $150 in denomination.

Then while I am at it, I have several monthly Chapter "Luncheon Meetings" so those would be limited to the Entertainment 50%? Meeting fee and lunch, but the amount is not separately stated.

It is amazing what you "actually see" when you have the receipts, instead of having the client just give you a total for business expense These items have always been an issue for me, that is why I am asking so I can advise the client in the future to best spend his money for the most tax dollars and also for the client to be in tax reporting compliance.

Thanks,

Sandy

The restaurant gift cards would be subject to the $25 deduction limitation. Gift cards issued to restaurants as a Thank You or referrals for past business aren't promotion or entertainment expense. A ticket to an sporting event or theater might be considered an entertainment expense.

IMHO, Chapter professional monthly meeting fees including a lunch which is not separately stated would be fully deductible.

[kaimana]

Personally, I don't, nor do I want to go through all their receipts. They are responsible for giving me accurate records. What they give me I report but I do educate them on what they can and cannot expense.

[newbie]

Personally, I don't, nor do I want to go through all their receipts. They are responsible for giving me accurate records. What they give me I report but I do educate them on what they can and cannot expense.

Whether you add up the receipts or the taxpayer adds up the receipts the questions still remain the same.

The restaurant gift cards would be subject to the $25 deduction limitation. Gift cards issued to restaurants as Thank Yours or referrals for past business aren't promotion or entertainment expense. A ticket to an sporting event or theater might be considered an entertainment expense.

IMHO, Chapter professional monthly meeting fees including a lunch which is not separately stated would be full deductible.

Agree with Zee, gift cards as thank you's aren't promotion and subject to the $25 limit.

Usually these professional meetings have a speaker or some educational value so if it has no separate lunch bill I would deduct 100%, if you bring your own sandwich your not going to get a discount and one would assume you are there for the meeting, not the food.

If you give the tickets and do not attend the event yourself, you have the choice of determining whether an item is either a gift or entertainment expense, but if you go with the client, you must treat the cost of the tickets as an entertainment expense.

[OtisMozzetti]

referral fees are taxable income

...
I have receipts for gift cards for clients to places like Olive Garden, Mimi's, etc. Would you limit those receipts to Gifts limited to $25 each, Promotions at 100% (I doubt and what is Promotional Expense?), or it be Entertainment 50%. Thery were purchased as thank yous either for a client that transacted business, or a referral. All gift cards are either $50, $100 or $150 in denomination.
..

A "thank you for a client that transacted business" is a reduction in the real estate commission (or other fee) that the client paid. It ought to become reflected in that client's basis in the property purchased, or in the amount realized on property sold.

A "thank you for a person [who provided] a referral" is taxable income to that person.

The trouble is, and the real estate agent knows it; ...[is] that the clients and referring persons likely aren't going to take these $50, $100, or $150 "gift" cards into account on their own taxes.

If the same payments were each made in cash, it would be obvious that the payments would be considered either a business expense, or a reduction in fees earned, for the real estate agent.

[Zee]

A "thank you for a client that transacted business" is a reduction in the real estate commission (or other fee) that the client paid. It ought to become reflected in that client's basis in the property purchased, or in the amount realized on property sold.

I respectfully disagree.

[taxxcpa]

Expenses

People use some terms, the meaning of whch, you can only guess. One client has "Customer Lobby" as an expense. Another has "Fulfillment Expense." When they record "Meals" it could be out-of-town or at the local Burger King.
A good tax preparer needs to be a mind reader.

Even after a client explains what some of these things are, often it is still not very clear.

[JG EA]

I also agree with Zee.I think this is outlined in TTB Section 8. I don't know of anything special for realtors as was mentioned,

...I have receipts for gift cards for clients to places like Olive Garden, Mimi's, etc. Would you limit those receipts to Gifts limited to $25 each,... Promotions at 100% (I doubt and what is Promotional Expense?), or it be Entertainment 50%. Thery were purchased as thank yous either for a client that transacted business, or a referral. All gift cards are either $50, $100 or $150 in denomination.

Under Meals and Entertainment:

• General rule—business deduction is limited to 50%.
• Taxpayer’s deduction when provided to general public for
promotional purposes.......................................... ....................... 100%
• Provided to individuals with no reasonable expectation of
getting any business from it................................................ ........ 0%
Provided to client or business associate when taxpayer or
employee of taxpayer is not present........................................... . 0%

Under gifts:

Deductible business gifts for customers and clients are limited
to $25 per individual per year

Then while I am at it, I have several monthly Chapter "Luncheon Meetings" so those would be limited to the Entertainment 50%? Meeting fee and lunch, but the amount is not separately stated.

• Taxpayer’s own meals, travel away from tax home....................... 50%

The fee would be at 100%. Many of my clients repeated report to me "travel expenses" and each and every year I ask - any meals in there? And there is of course. Also, Or if they provide "Meals and Entertainment" I have to double check that none of them are just for the taxpayer locally. Even ones who should definitely know better throw in an occational local Burger King, because they need lunch one day and say to themselves - this should be deductible.

[Burke]

[QUOTE=JG EA;83236]Many of my clients repeated report to me "travel expenses" and each and every year I ask - any meals in there? And there is of course. QUOTE]

And don't forget the meals charged to the room on the hotel bill.

[KJ Judd]

Realtors often give a "closing gift" to a customer who purchases a home from them. To thank them for their business & encourage referrals. I deduct them at 100% - ordinary in that trade or business. And similar to reducing their commission.

[erchess]

Respectfully Dissent

Realtors often give a "closing gift" to a customer who purchases a home from them. To thank them for their business & encourage referrals. I deduct them at 100% - ordinary in that trade or business. And similar to reducing their commission.

They are still business gifts and imho subject to the $25 limit.