Cell Phones

[photoman]

I was reading my taxbook and I am unclear what to do with a cell phone if it is needed for business , but not reimbursed by employer . I'm puzzled where to claim it or a portion of it.

[solomon]

I was reading my taxbook and I am unclear what to do with a cell phone if it is needed for business , but not reimbursed by employer . I'm puzzled where to claim it or a portion of it.

The easy part is where - Sch A Misc. The hard part is what portion to claim. There needs to be clear documentation of the business use. One good thing is it is no longer listed property - although I doubt many treated it in such a manner anyway.

[AZ-Tax]

Cell Phone business use

My guess if its an employee (W-2) who needed the cell phone as required by the TP's employer yet not reimbursed by employer, that would fall under form 2106 under Sch A subject to AGI and that is if TP itemizes and only the % of the cell phone used for business for most likely the TP also uses the cell phone for personal as well.

[photoman]

Thanks for the advice

I appreciate helping me clear up this matter. It seems that to the TP as long as I am listing on the return they feel they are getting something. (end result could be minimal) in regards to the benefit actually received

Ron

[Burke]

The good news about them not being listed property any more, is that depreciation rules are somewhat less stringent.

[NotEasy]

My guess if its an employee (W-2) who needed the cell phone as required by the TP's employer yet not reimbursed by employer, that would fall under form 2106 under Sch A subject to AGI

What about if the employer reimburses the employee? Can they set up a reimbursement plan such as the employer agrees to reimburse 50% of the cell phone expense of the employee? Am I correct to think that if it is considered an accountant plan, the reimbursement might not have to go to W-2 box 1? Opinion?

[Burke]

Reimbursement of actual bus expenses under an accountable plan would not go on the W-2. Neither would the employee deduct anything.

[AccTaxMan]

Reimbursement of actual bus expenses under an accountable plan would not go on the W-2. Neither would the employee deduct anything.

I think the major issue is what you need to do to make sure that it is a legitimate accountable plan. I think I hear someone mention before that it has to be in the memo of the board meeting of a corporation. Does another really expect all those single owner S-corps would hold a board meeting every year...the single owner talking to himself during the meetings?

[Gretel]

It might sound stupid that a sole owner S-Corp has to hold at least annual meetings. A Corporation is a Corporation in the legal eye and it does not matter if 1 person or 100,000. It also does not matter which letter they are assigned A, B, C, S (just kidding).

Having said that, the legal paperwork throughout the year: annual meetings, record all major decisions in the minutes is what will eventually give liability protection. If something happens, the first thing a lawyer is after is the minute book. If it wasn't kept up to date, every shareholder is personally fully responsible for any damage.

So it defeats the purpose of being a S-Corp, if someone doesn't want the burden of the required paperwork. Then it is better to be a different entity then paying all the additionally costs of being a corp. and then not being protected after all.

[oceanlovin'ea]

Llc

That is why a lot of people are now forming LLC's and then choosing to be taxed as an s corporation.

LLC's are not required to have board meetings and keep minutes.

Linda, EA

[Gretel]

Yes, that is true and for the longest time I was a big defender of LLC's, also because of non-requirements of meeting etc.

Recently had a meeting with a real good lawyer and revised my position somewhat. Nobody really knows how vulnerable a LLC is in case of liability law suit. For that reason I tend more towards S-Corp again or at least have LLC have meetings and record major decisions in minutes somewhere. I am curious how LLC's will do in future law suits.

Does anyone on this board has knowledge of any past LLC law suit for liability issues?

[Burke]

Does another really expect all those single owner S-corps would hold a board meeting every year...the single owner talking to himself during the meetings?

Well, yes. He had better have some document that it occurred. It can say,...."there being no business to discuss, meeting was adjourned.... Or it can describe the accountable plan for bus expenses, as has been mentioned. I have had banks require a board resolution even to open a bank account or CD, certainly to obtain a loan, or to make a shareholder loan, etc. You get the picture.