Business Entertaining Part Paid for with EBT

[erchess]

I went to a party on Saturday night hosted by a client. The major topic of discussion was the client's recent venture into MLM. (I won''t name the company which is new, but they sell meat, tools for grilling meat, spices for grilling meat, and bar ware even to the extent of a set of poker chips and I think playing cards as well as clothing promoting the company mostly to men by inviting people to parties. In a first for the company, he is using Social Networking sites to find distributors and he has in several weeks signed up a dozen or so in various states and some of these people are productive.) Since he was fishing both for customers and distributors we talked both about the good quality of the items for sale and the income potential of the business with a side excursion into how every recession since the one after WWII has seen the rise to prominence of an MLM company that was just starting out.

Before anyone else was there I reminded him to keep his receipts and he said to me that he felt he could deduct the costs of the items he bought from his company because he had paid for them out of his pocket but he didn't think he could deduct the stuff he bought at the local grocer because he paid for that with his EBT Card which is what people have now instead of the food stamps I grew up seeing in use. I told him I would check on it but my feeling was it didn't matter. I have since reflected that if some private person had given him the money or the food products as a gift I believe he could have deducted the cost.

So what say you - Is hist first notion that he can't claim a deduction for an expense paid with dollars he gets from taxpayers right or am I right that he can?

I realize (as does he) that the deduction for business entertaining is limited to half of what is actually spent.

[erchess]

Bump

I'm giving this a bump to see if anyone has any further ideas.

I'd also be interested in hearing from anyone who thinks there is a problem using EBT funds for food other than for him and his kids. That concern just came to me. I am sure he spent less than $40.

He has by the way generated some income from this business activity and if he is successful enough getting customers and distributors he won't have to pay much for the products that he has so far obtained. For example when one signs up in the company one pays a dollar. One receives a collection of food clothing and grilling tools that one could have purchased for $600 without being a distributor. Depending on one's productivity during the first so many days as a distributor one will get a bill for this shipment not exceeding 300 and conceivably as low as zero. He used all that food at parties I did not attend and he's more than on track to getting the first shipment free. He will eventually have to pay $80 for what he bought from the company for the party I attended but he has a grace period during which the bill is deferred and he may be able to get payment taken out of his commission checks.