Thanks for acceptiong my experience and finding as your answer!
Here it is again in the answer box. This will charge your account..
I did the same thing when I had a telemarketing phone room. I has a
masseuse come in on random days, between 6 & 8pm. To qualify for a
free massage that day, you had to have logged X number sales that day.
It was VERY effective.
As a rule of thumb, if you spend money on your business, for ANY
reason, including employees, and it is a legitimate expense, you can
write it off. The IRS is not in the business of telling you HOW you
can motivate your employees. If you want to take them sky-diving as a
reward, that's legitimate.
My CPA wrote it off under "entertainment." The other option is as an
employee benefit, but that was too much recordkeeping and I didn't
want to pay the additional payroll taxes on it, so "entertainment"
worked for me. With entertainment, I simply wrote the employees names
on the paid bill --like I did for ordering pizza (& beer) for the
workers, chinese take-out, whatever.
Clarification of Question by ikoskela-ga on 17 Apr 2006 00:50 PDT
What are the caveats surrounding deducting business entertainment expenses?
Either the rules have changed in the last 6-7 years, or I should have
added the value to to each employees gross income...
Topic 512 - Business Entertainment Expenses
..."You may also meet the directly-related test by showing that the
expenditure was for entertainment occurring in a clear business
setting directly in furtherance of the taxpayer's trade or business;
that the expenditure was made directly or indirectly to someone (other
than an employee) as compensation for services; or that the
expenditure was paid as a prize or award which is required to be
included in the recipient's gross income. An expense will not be
directly related under circumstances in which there is little or no
chance of engaging in the active conduct of business..."
The link has the entire section.
If I can be of further assistance, please use the clarification feature..
Search strategy used at Google:
Personal experience, and:
IRS entertainment business deduction