Employee Business Expenses

[peggysioux]

Have a new client as a S-Corp. Business is sales and company has a sales force with an accountable expense plan. Employees (non-shareholders of business) submit expense reports on a regular basis where they are bascially taking other employees to lunch and expensing. Manager is authorizing these expenses to be reimbursed. Employees are not staying overnight. Is this a deductible business expense (at 50%) for employer? It does not fit the meal/entertainment requirements, but past tax preparer did not question. Input would be appreciated.

[ChEAr$]

daily meals

Have a new client as a S-Corp. Business is sales and company has a sales force with an accountable expense plan. Employees (non-shareholders of business) submit expense reports on a regular basis where they are bascially taking other employees to lunch and expensing. Manager is authorizing these expenses to be reimbursed. Employees are not staying overnight. Is this a deductible business expense (at 50%) for employer? It does not fit the meal/entertainment requirements, but past tax preparer did not question. Input would be appreciated.

You say "on a regular basis, meaning the expenses also are on a regular basis. Sounds
like employees taking turns buying lunch and sticking the corporation for the tab.
Hard to justify this as a tax deductible expense unless EVERY meal is a bona fide
business meal at which business is discussed between chews.