Single Member S Corp buys Bow Flex.

[Safire]

Deductible?

I do know that it is located at his shop/office, which is a rented space.

[rosieea]

What's the Bow Flex for?

[Safire]

So he ( the only employee ) can work out and stay fit in order to do his job.

[Brian EA]

I can claim my bicyle tires too. I ride to work in order to be fit so that I can do taxes

[Unregistered]

So he ( the only employee ) can work out and stay fit in order to do his job.

So I guess you deduct all of his food too, since if he didn't eat he wouldn't be very fit for doing his job. He'd be dead!!

[Safire]

LOL, good idea!

Look at it this way though. If he has that room set up as an "On Premises Athletic Facility" for use exclusively by employees. Why not?

I looked up the fringe benefits and there is no special treatment of more than 2% shareholders for the benefit of free use of the athletic facility.

Wouldn't an S Corporation be allowed a deduction for providing an Athletic Facility for their employees?

Going to look that one up............

[Chief]

Employee Services by Employer

Deductible?

I do know that it is located at his shop/office, which is a rented space.

I also know that a large tax software company has set up a large, elaborate gym in its office building for its employees. I am guessing that in your situation that a one member S corp cannot do this. Such a move would be highly questionable. How would you defend this during an audit?

[Safire]

Chief, that is a good point. I would not want to defend that position in audit unless I had a good example of why it would be allowed.

Are there written rules anywhere that state that if you maintain an athletic facility there has to be more than one employee?

I pretty much knew this would turn out to be a distribution to him, but I also know that I need to be a little more aggressive in saving my clients some tax, ( but only if and when it is legal ).

At my old job, I was accused once of secretly working for the IRS because I questioned this woman pretty good to be sure she qualified for some deductions.

For some reason I tend to think like the IRS would. I tell my clients that if it looks funny to me, it will look funny to the IRS.

[Unregistered]

I'm the wise guy who posted the food comment. In the interest of being more helpful, I think you have a tax-free fringe if the Bowflex qualifies as an athletic facility. Here's what Reg. 1.132-1(b)(3) says:

(3) On-premises athletic facilities. For purposes of section 132(h)(5) (relating to on-premises athletic facilities), the term "employee" means—
(i) Any individual who is currently employed by the employer,
(ii) Any individual who was formerly employed by the employer and who separated from service with the employer by reason of retirement or disability, and
(iii) Any widow or widower of an individual who died while employed by the employer or who separated from service with the employer by reason of retirement or disability.
For purposes of this paragraph (b)(3), any partner who performs services for a partnership is considered employed by the partnership. In addition, any use by the spouse or dependent child (as defined in paragraph (b)(5) of this section) of the employee will be treated as use by the employee.

Since 2% shareholders are treated as partners for fringe benefit purposes (Code Sec. 1372), it looks to me like you have a green light. According to at least one reputable source, an S corp’s deduction for nontaxable fringe benefits for employees (including 2% shareholder-employees) is reported on page 1, line 18, of Form 1120S. Nothing goes on the K-1.

[Safire]

Thanks unregistered.

I felt pretty certain that he could have the benefit tax free, but uncertain as to whether the Corp should take the Bow Flex off as as asset.

You know, these people come in saying, so and so down the street said they could take this off and that off and that their tax person let them take this or that.

Had a guy just yesterday tell me that a tax lady told his friend to keep up with every meal he ate while out working on jobs ( not out of town, I mean everyday meals ) because he could take that as an expense. This lady is a pretty well known professional in the area, so I don't know if his friend just got mixed up on what she said or if she is actually giving out that sort of advice.