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LLC Tax Reform Questions
Posted on 12/21/17 at 6:56 pm
Posted on 12/21/17 at 6:56 pm
I am not meeting with my CPA for a couple of weeks but I have some questions regarding how the new tax reform will affect operations.
LLC is a single person in what could be classified as consulting, business negotiation and strategy, and advising people on business matters. A lot of business is done over dinner tables and entertainment is very important.
I am reading that the meal and entertainment expenses are now not deductible, is this true?
I also am reading information on there being a 20% deduction up front, but there are some caveats to who receives that initial deduction.
I can’t find anywhere that I feel is authoritative on these issues, and am hoping the TD community can help me get some sleep tonight by giving some insight. Thanks.
LLC is a single person in what could be classified as consulting, business negotiation and strategy, and advising people on business matters. A lot of business is done over dinner tables and entertainment is very important.
I am reading that the meal and entertainment expenses are now not deductible, is this true?
I also am reading information on there being a 20% deduction up front, but there are some caveats to who receives that initial deduction.
I can’t find anywhere that I feel is authoritative on these issues, and am hoping the TD community can help me get some sleep tonight by giving some insight. Thanks.
2
Posted on 12/21/17 at 7:15 pm to TigerGrad2011
quote:
I can’t find anywhere that I feel is authoritative on these issues, and am hoping the TD community can help me
You've come to the right place.
However, I haven't read all of the bill yet so caveat emptor.
quote:
I am reading that the meal and entertainment expenses are now not deductible, is this true?
I do not think BUSINESS meals and entertainment were touched. It's the unreimbursed employee expenses that were removed.
quote:
I also am reading information on there being a 20% deduction up front, but there are some caveats to who receives that initial deduction.
It sounds like your business would be one of the "professional service" businesses that is getting singled out to not get the deduction, but if your income is below the threshold ($157,500 Single/ $315,000 MFJ) then you should still get the deduction.
One of the caveats is that the 20% deduction is limited to 50% of how much "w-2 salary" you pay yourself, but if you're a sole prop LLC and not electing to be an SCorp then I don't think you need to worry about that.
I'm not sure on the actual calculation on when you get that 20% deduction yet, though.
Posted on 12/21/17 at 8:51 pm to SLafourche07
quote:
It sounds like your business would be one of the "professional service" businesses that is getting singled out to not get the deduction,
I think they nixed that in reconciliation. Professional service is no different IIRC
Posted on 12/21/17 at 9:05 pm to Weagle25
quote:
I think they nixed that in reconciliation.
Nope.
Posted on 12/22/17 at 8:18 am to Weagle25
quote:
I think they nixed that in reconciliation. Professional service is no different IIRC
And let me expound on my nope response.
They did remove Architect and Engineers from the final bill, but accountants, lawyers, doctors, financial services, and consultants were kept in.
I think the justification is that these people aren't actually "businesses" and they are really only selling their time whereas architects sell really really big pieces of paper.
So that means I'm going to be investing in a big printer and the IRS will be getting some pretty large tax documents from me this year.
Posted on 12/22/17 at 8:18 am to Weagle25
Double Post.
This post was edited on 12/22/17 at 8:19 am
Posted on 12/22/17 at 8:21 am to SLafourche07
So what does that mean in my case specifically? It does not look like we will hit any of the thresholds listed above as a family so does that come in to play for us?
Posted on 12/22/17 at 8:35 am to TigerGrad2011
From my understanding, if you're under the threshold then you get the deduction regardless of industry.
It's only if you're over the threshold that you need to start worrying about the 50% w-2 income and the disallowed business types.
It's only if you're over the threshold that you need to start worrying about the 50% w-2 income and the disallowed business types.
Posted on 12/22/17 at 8:51 am to TigerGrad2011
quote:
I am reading that the meal and entertainment expenses are now not deductible, is this true?
Entertainment expenses are out. Meals are still 50%. That's gonna be fun sorting out. Basically your client's lunch at Visions is 50% deductible but the dances aren't.
Posted on 12/22/17 at 8:59 am to LSUFanHouston
quote:
Basically your client's lunch at Visions is 50% deductible but the dances aren't.
Just need to order the Deluxxxe Buffet.
Posted on 12/22/17 at 8:59 am to LSUFanHouston
quote:
Basically your client's lunch at Visions is 50% deductible but the dances aren't.
good thing we only go for the food
Posted on 12/22/17 at 9:01 am to lsujro
So, no more tax deductible fishing trips?
Posted on 12/22/17 at 9:54 am to Janky
quote:
So, no more tax deductible fishing trips?
Yup
Also consider:
1) LSU Tradition Fund donations are no longer deductible as a charitable expense
2) Game tickets / season ticket cost for tickets you give to your clients, etc, or use in your business are no longer a deductible expense.
Posted on 12/22/17 at 10:03 am to LSUFanHouston
Dang.
Posted on 12/22/17 at 10:13 am to LSUFanHouston
quote:
Game tickets / season ticket cost for tickets you give to your clients, etc, or use in your business are no longer a deductible expense.
I knew about the TAF/Tradition fund deductible going away, but not this one. I think that's a much bigger issue for LSU than the TAF fees. I imagine a good percentage of seats between the endzones and suites/club seats are purchased by businesses for the purpose of entertaining. If they can't deduct the cost of those tickets anymore, they may quit buying them all together.
Posted on 12/22/17 at 10:15 am to medtiger
quote:
If they can't deduct the cost of those tickets anymore, they may quit buying them all together.
It will be interesting. Clients still want to be entertained, vendors still want to impress their clients. Where it might hurt is with some of the smaller companies... the bigger companies, this was a very minor expense anyways.
Posted on 12/22/17 at 4:20 pm to LSUFanHouston
So a business can still deduct the IRS mileage allowance, and the hotel room and 50% meals.
But if an employee is not reimbursed by the company, the employee has to eat the above expenses?
But if an employee is not reimbursed by the company, the employee has to eat the above expenses?
Posted on 12/22/17 at 4:54 pm to matthew25
Yes
So the play here is to negotiate reimbursements with employer even if you need to take less pay
So the play here is to negotiate reimbursements with employer even if you need to take less pay
Posted on 12/22/17 at 4:57 pm to LSUFanHouston
Wait, if I go out of town for business and stay in a hotel I can’t write that off as a business expense?
Posted on 12/22/17 at 5:40 pm to SLafourche07
quote:
They did remove Architect and Engineers from the final bill, but accountants, lawyers, doctors, financial services, and consultants were kept in.
I assume Veterinarians were lumped into the accountants, lawyers, doctors, etc..??
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