Joe Roeger

The Lake of the Ozarks is well-known for magnificent waterfront homes, fine dining and entertainment. Of course, everything has its price. The question is—how do we get the IRS to help in our investing and entertaining endeavors at the Lake?

Let’s consider investments in Lake homes first. Without question, the tax advantages of home ownership are the most favorable tax treatments still available to the average American taxpayer. Mortgage interest deductibility on loans on primary and second homes aggregating less than $1 million are the No. 1 itemized deduction available to the average taxpayer. And don’t forget real estate taxes also are deductible.

In the case of your principal residence, the IRS code saves the best for last. Taxpayers can exclude from income up to $250,000 of gain ($500,000 if filing jointly) on its sale. There are several qualifying conditions attached to this treatment, chief among them the home must have been used as the principal residence for two of the last five years. Consult a tax professional to ensure you meet all qualifying conditions for this very favorable tax treatment.

Other, more restrictive tax benefits of home ownership, such as the home office deduction, are also available. The rules governing home-office deductions are extensive and exacting, so consult your tax accountant.

Entertainment expenditures in the form of dining, amusement or recreation also can be deductible; however, the conditions and limitations rival the Da Vinci Code in complexity. Much too extensive to discuss in detail, in order to be deductible, entertainment expenses generally must:

• Be both ordinary and necessary business expenses
• At minimum, be associated with the active conduct of your business
• And, a substantial business discussion must take place during or directly before or after the entertainment

Although it sounds complicated, your tax accountant can help you document entertainment expenditures that may qualify as deductions under the right circumstances.

Mark Barrett

What’s the one thing on everyone’s mind as we try to dig out of the recession? “How can I spend more in restaurants and do it wisely”? Wait, that’s not what you’ve been pondering the last couple of years? Well, I’m here to share some tax strategies on business meal, travel and entertainment deductions.

Reasonable travel and entertainment costs are tax-deductible only if they are directly related to business or associated with business. Sounds kind of “fuzzy,” doesn’t it? Directly related to business means that business took place or was discussed during the entertainment, and associated with business means that business took place either immediately before or after the entertainment (i.e., a small business owner took a client out to dinner or golfing following a meeting). Only 50 percent of meals and entertainment expenses are deductible as business expenses, but that sure beats none!

These deductions don’t have to be exclusively with prospective or current clients. Discussing business with an employee during a meal qualifies for the 50-percent deduction. Lunch ordered in for a staff meeting can qualify for a 100-percent deduction. So whether it’s with clients or employees, find out whether your event qualifies.

Think of the possibilities: sporting events, concerts, golf, great dinners at Lake restaurants, cocktails at your favorite waterfront bar… the deductions are out there for the taking.

So, what’s the catch? You have to be organized and keep meticulous records to substantiate any deductions. For business-related meals and entertainment you need to document the date, place, type of business discussed, the amount spent, and who was present and their relationship to the business. Remember that staff meeting that was 100-percent deductible? Company parties that include all employees are 100-percent deductible!

So, keep good records, talk business and start piling up the tax deductions now! But please don’t take just the advice of a half-cocked restaurateur; consult with a tax professional. I want to see you in our restaurants, not in jail!

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