Client is the owner of a S-corp. The company installed a new internet service lately and the phone company has sent him a "reward card". The reward card is going to expire in a few months and the company does not have anything to buy at this time. In order not to waste the credit, he plans to use the reward card to buy his personal stuffs. If that's the case, is it considered income to him?
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no, any way you look at it it is a discounted price on the item...same as if he paid for the item on sale.Believe nothing you have not personally researched and verified. -
Thank you.Originally posted by taxea View Post
But it is a discounted price on the internet service to the S-corp. But the owner will use the benefit (in the form of the reward card). So would it be considered income that the S-corp pays to the owner?Comment
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If this is a Visa Reward Card, then I would think the use of the company card by the officer for personal use would be taxable to him as other income on his Form 1040.
Sure it is a discount on the company's cost of the internet service if the company uses the card for business purchases; however, the discount is not realized by the company if the officer uses the card.
Just my two cents......Comment
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What is the amount of the reward card?"The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I was just thinking that $25 or less wouldn't be an issue if the owner used it personally. But surely the business uses something they could stockpile - postage stamps, paper, pens, toner, ink cartridges, etc."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Another angle: you might consider it as a shareholder withdrawal which would not affect the net profit or the taxable income that flowed through to the shareholder.Comment
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Didn't we go through this same scenario with the frequent-flyer miles? Company pays for flights, employee gets the mileage credit?Comment
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Wouldn't the used credit be income to the Entity ( or a credit to the expenses on the card) and a NPD to the shareholder?This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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This is $150 in an S-Corp, with a tax consequence of $50 $60 at the very most.
I knew what I would do at the outset, but was curious about the big picture.
Tell the client to take his wife or girlfriend out to a nice dinner somewhere.
But if this is such a conundrum, I'd advise him to send the card to me.
Then he can take a tax deduction for professional advice.
Problem solved.Last edited by JohnH; 05-15-2014, 03:00 PM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I wonder how many even worry about getting the corporation envolved when the credit is used. They just use it how they want and that is that.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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I'd give the card to my secretary, Deanna Minimus.
We call her Dee for short."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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