Timeshare

[Taxman]

I have a client who owns an S-Corp and recently purchased a timeshare. The timeshare is in the clients name but the S-Corp is currently making the payments. If he plans to entertain clients at the time share can the S-Corp deduct 1/2 of the payments as entertainment expense or would the client have to transfer the interest in the timeshare to the S-Corp inorder for the S-Corp to take the deduction.

If the client is not able to transfer the timeshare to the S-Corp, then it's probable better that the payments come from his own account and not the S-Corp account.

[Armando Beaujolais]

I have a client who owns an S-Corp and recently purchased a timeshare. The timeshare is in the clients name but the S-Corp is currently making the payments. If he plans to entertain clients at the time share can the S-Corp deduct 1/2 of the payments as entertainment expense or would the client have to transfer the interest in the timeshare to the S-Corp inorder for the S-Corp to take the deduction.

If the client is not able to transfer the timeshare to the S-Corp, then it's probable better that the payments come from his own account and not the S-Corp account.

The payments the S corporation is making on the shareholder's timeshare are S corporation distributions and reduce the shareholder's basis in the S corporation.

The timeshare is an entertainment facility. See TTB page 8-10. Not deductible.

Even if there wasn't a specific rule for entertainment facilities (in addition to other restrictions on entertainment expenses), I don't see any justification to call the timeshare a business expense. Just because it might be in the S corp's name doesn't magically validate the business expense. "Planning" to use it for clients doesn't turn it into a business expense. Paying for it out of the S corp checking account doesn't make it a business expense, any more than if the S corp paid for a vacation.

Are you sure the client didn't just purchase the timeshare primarily for personal purposes or investment? Are you sure that paying for it out of the S corp isn't an attempt to make it look like something its not in order to get a "business" deduction?