Employee Retreat deduction

[rwm221]

I have a client who wants to know if there would there be a way to deduct an employee and family retreat/vacation type of thing. I have not heard of this and could not find anything on it so I thought I would ask here.

Thank You

[ATSMAN]

When I used to work in Sales, the employer did pay for the spouse/significant others plane fare to the annual meeting if the employee achieved certain goals. Also the discounted fare (not sure how they figured out) was added to the employee's bonus amount and taxable to the employee. So I am assuming the corporation took a tax deduction. I know that if the employee only went there was no add back.

[TaxGuyBill]

I think the possible deduction would fall under ?274(e)(4), but fewer employee there are, the less valid it seems (because it would seem to be primarily for owners):

(4) Recreational, etc., expenses for employees
Expenses for recreational, social, or similar activities (including facilities therefor) primarily for the benefit of employees (other than employees who are highly compensated employees (within the meaning of section 414(q))). For purposes of this paragraph, an individual owning less than a 10-percent interest in the taxpayer’s trade or business shall not be considered a shareholder or other owner, and for such purposes an individual shall be treated as owning any interest owned by a member of his family (within the meaning of section 267(c)(4)).


So it would need to be "primarily for the benefit of employees" (other than owners and related parties), *OR* the cost be added to the employee's W-2.

Expenses for family members would not be deductible, unless that cost was added to the employee's W-2.

https://www.law.cornell.edu/uscode/text/26/274

[ATSMAN]

TaxGuyBill confirmed my observation (I was not into taxes back then). OP make sure you get good documentation because I feel IRS may be closely monitoring such expenses like Meals and Entertainment. I always get very nervous when my client's have large deductions in that category.

[TAXNJ]

Some references:

Travel and Lodging. TTB. 8-9


TTB. 36-1. In contrast to a direct seller, companies may hire sales representatives to market their products to retailers and other businesses. The direct seller is selling directly to the consumer in a location other than a retail establishment. The sales representative often sells products to retail stores or other types of businesses, who in turn sell to or provide services to the consumer………


IRS web-site

https://www.irs.gov/taxtopics/tc511

[TAXNJ]

I thought the OP was about an employee??
Seems an uphill climb to deduct as a business expense, especially for spouse.

Always difficult to understand your critiques of various reply posts but will try this one time.

Other than your reply post, the reply post you reference does not state “to deduct as a business expense, especially for spouse” (if not an employee).

Your critique of the reply post only your first sentence seems to be somewhat correct.

With your second sentence it may not be an “uphill climb”, if one reads more in the references and other references, that if a spouse and/or child is an “employee”, that may or may not make a difference. That is when the Original Poster, who has all the information, can make a decision as to what is “business vs. personal” and what is deductible or not.