Category: Deductions & Credits Copyright 1998, The Tax Resource Group. All rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com The Joint Committee on Taxation General Explanation of The Tax Reform Act of 1986, commonly called "The Blue Book", addresses the issue you raised. The Blue Book is not authoritative, strictly speaking. It is intended to clarify and explain a newly issued tax bill; however, the source of the clarification is the congressional committee intimately involved in the legislation in question. The point is that Blue Book language, while not strictly authoritative, is very nearly so because it is supposed to represent a clarification and explanation of the thinking of the drafters of a piece of legislation. The Blue Book says in the case of a nonemployee service provider such as an accounting firm, reimbursed expenses for meals and entertainment are fully deductible by the service provider if the person to whom the services are provided is given an accounting of the expenses sufficient to the meet the standards of Section 274(d). In that case, it is the person for whom the services are provided who bears the reduction in the deductibility of meals and entertainment expenses, not the service provider. Accordingly, the question for your client is what kind of accounting did she provide to her clients. |
