Discussion:Health Care or other Fringe Benefits for S Corp. S/H owning 2 %

...I'm still looking, still looking...! LOL

I hope you meant that to be funny, cuz it was! It really was!!

I started doing small business income taxes more than thirty years ago, and - best I can remember - I never ran into either one. Never had a client with a gym and never had client with an eating facility. Maybe the closest I ever came to "employer-provided meals" is the time I pointed out to a client that when he "buried" his grocery bills in the "Meals and Entertainment" account, he got a deduction for only 50% of what he spent. He started putting the grocery bills into "Office Supplies" the next year. He was one of my smarter clients. Don't get me started on how "smart" clients can sometimes be...

But maybe it's not deductible at all, as an "entertainment facility" [Section 274(a)(1)(B)]?

I remember the stationary bike in his office; I realize now that had he moved it into a another room, he could have had a gym, but he was not that bold.

So why the audits? The publishing company was S Corp, yet he took no salary but rather paid a management fee to a C Corporation that he owned. That corporation paid his health insurance, a small salary and a large consulting fee. That fee gave him a wonderful defined benefit plan using his Schedule C income. The employees of the S were not covered for health insurance and had no pension nor 401K, but they had this wonderful lunch room and employee picnics, all de minimis benefits.

At that time he was fighting with NYC where his office used to be, but had received an audit letter from IRS. He took me to his beautiful house, on Long Island Sound, to show me the latter. I told him I did not have the time to represent him, but also noted that he had, lunchroom excepted, real problems with his setup.