I have a client that moved from Michigan to Florida. He had a contract with a company in Michigan and as a result, traveled to and from Florida for work. He rented a Condo in Michigan for his stays here. It's my understanding because he is a 100% S Corp. SH that he can not do an allowance for his lodging expenses but can do an allowance for his meals expenses. Is that correct?
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When you say "an allowance," are you asking whether he needs to have receipts and reimburse the actual cost rather than claiming the Federal lodging rate? If that's the question, yes: an S-corp 2% shareholder is not permitted to claim the Federal lodging rate without substantiation, but may claim the M&IE rate.Originally posted by Hamacher View Post
I'm wondering if instead you are asking if the lodging may be reimbursed at all. In this case, I would say yes, absolutely - for its cost, based on receipts. The corporation remained based in Florida. If his contract lasted or could be expected to last for more than one year, then as an employee of the S-Corp, he should have relocated and the IRS will disavow the travel entirely, but within a one-year period (or under a scenario where this is one of several contracts, and he travels from Florida to each location), there's nothing magical about his having rented a condo in lieu of a hotel room. My understanding is that where travel reimbursement applies, it applies as much for lodging as for M&IE. The only case where this might become thorny is if the condo he is renting is one that he personally owns, in which case self-dealing may apply.
I hope that helps.--
James C. Samans ("Jamie") -
This post was sent two months ago. I read it as the location of his work place is in Michigan, where he formerly lived. He moved to FL and had to commute back to perform his work duties. He did not say the company was based in FL. If he is a salaried employee, this may not be deductible. Need more clarification.Comment
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