The Tax Resources Organization

What’s Tax Deductible

February 1st, 2011

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

What’s Tax Deductible
What's Tax Deductible

Question: accounting and taxes small town restaurant type question related to employee meals?

If a restaurant owner, sole proprietor, decides to offer employees 50% discount on meals how can that be properly accounted for?
My understanding is that these would not be considered deductible employee benefits because the employees are not required to live on the premises or anything like that. The employees are also not required to purchase a meal. Can someone give some proper guidance on that?
Also, if the managers would get 100% discount on their meals can that be done or is that seen as illegal under current law? What’s the best way to do it if possible?
The state is Alaska.
thats what I thought can you give me any links to a pub or something in the actual code? would be very helpfull

Answer: There is no tax related issue regarding employee optional meals.

It’s nice of a manager to offer them, wether free or discounted, but u don’t report the revenue any differently, nor is it reported an employee benefit for tax purposes.

One great reason to do so, aside from keeping your employees happy, is it helps them get more familiar with your menu, and thuis assists them in assisting patrons with decisions.

Managers can get a discount also, of course, based on owner’s discretion, and they would not be reported as revenue also, since they’re COMPs.

Bottom line, employee meals are treated as customer meals, ur just being nice if you give them a discount, unless of course, the employees live on property, and the room and board laws are in effect.