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Author: Umm Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214643  
Subject: Re: Summoning the Board Geniuses Date: 3/22/2013 8:00 PM
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"After a series of arguments making the point that a company can NOT pay for a worker's clothes, meals, transportation, and daycare and call these a corporate expense, or if it does, the worker would have to declare them as taxable benefits, I thought we might be entitled to a bit more than a simple reaffirmation that it is legal, but I guess if your mind is made up already, why bother with arguments?"

In my first post in this thread I tried to make sure when referring to clothes, meals, and transportation that they were all in relation to work.

I am not a tax expert (especially corporate taxes), but I have worked at various jobs where work clothing was supplied and meals given. I was never taxed on any of this, nor did the company notify the IRS of any such benefits either. Since at most of the jobs where meals were given there was never any record of who ate and who didn't (nor what they ate) I am not quite sure how the company would track this anyway. My wife has worked at a job where she travelled away from home 4 days a week. She was given a $35 per diem expense for food when travelling that she did not have to pay taxes on.

I have no personal experience with using corporate cars. A close cousin of mine used to work for a company that gave him use of a car (and paid for all of the maintenance as well). The car was not in his name but the name of the company. He travelled by auto for his job though so probably 90% of the mileage on the car was directly work related. When he left the company he returned the car. He never paid any taxes on the car, nor was anything ever reported for it.

I worked at a company that required certain employees to have high speed broadband connections at their homes for off hours support. The company paid these employees for their internet connectionn through reimbursement (they brought in a copy of their bill and the company paid them). They were never taxed on this.

I have also worked for companies that have allowed employees to use company owned condos in Florida and Las Vegas (even for non-company related trips). I was never taxed for using the condos even though a majority of my use was for pleasure. I did have to pay the company a ~$25 a day fee for non-work related use though.

I have also worked at numerous companies where there was a gym on site and never taxed for it. One company I worked for actually reimbursed me for a gym membership near my house (the CEO was a fitness freak and encouraged it in his employees). I was never taxed on either of these benefits.

I have no experience with daycare. I would assume it was similar to other benefits though.

In each of these cases though I was an employee of the company and not an owner so there was a natural barrier to abuse. If an employee decided to get $1000 italian loafers instead of the standard $75 workshoe the company wouldn't allow it since it was an expense to them. The company wouldn't purchase a $150,000 Mercedes for its employees when a $25,000 car would do.

For the "personal corporation" discussed in this thread though there wouldn't be that natural barrier to abuse as to what was work related and what wasn't. That would entail setting up a whole host of vague and arguable rules to fight over leading to a bunch of administrative hassles.

Instead, a %35 corporate rate is much simplier. Again, it is an ugly distortion. But it offsets the ugly distortion of how corporations can used to hide from taxes.
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