TaxCoach Briefs:    September 11, 2008

Volume 3, Number 36

• Spotlight on Strategy: Eat, Drink, and Be Deductible
• Sneak Peek: Client Data Bulk Loader
• Member Event: PowerUser Roundtables
• Member Event: Took Me Out to the Ball Game

Attention All-Stars and Hall of Fame members: The September teleseminar is available on the All-Stars page. Once again, we saw great turnout for our "mostly Mastermind" discussion of creating, using, and implementing systems. Our next teleseminar will be Tuesday, October 14. If you have questions or ideas for the group, let us know. See you on the 14th!

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SPOTLIGHT ON STRATEGY (EAL)
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EAT, DRINK, AND BE DEDUCTIBLE

Fall is almost here. The kids are back in school, and it's time to get down to business. You and your clients will probably be doing more entertaining. And, as the holidays approach, you'll want to know how to make the most of holiday entertainment expenses. (Just 104 more shopping days till Christmas!)

Today we'll review the rules for deducting business meals and entertainment so that you can recall them immediately. Remember, the more deductions you can give clients -- especially when you can rattle them right off the top of your head -- the more they'll value their relationship with you.

Meals and entertainment you and your clients host in the course of your business are deductible if they’re directly related to the active conduct of your business or they take place directly before or after a substantial, bona fide discussion directly related to the active conduct of your business. That means, clients, customers, or patients; prospective clients, customers or patients; referral sources; and other business relationships (vendors, professional colleagues, etc.).

The general rule is that you can deduct 50% of most meals. Specific deductions include meals, drinks, taxes and tips.

Now for the fine print:

• Surroundings must be conducive to business discussion. (I think this rule eliminates most so-called "gentlemen's clubs," despite how hard they promote themselves as places for "business" meetings!)

• To prove your deductions, you’ll need a diary, day planner, or similar log to verify your deduction. IRS Publication 463 directs you to record the cost of the meal, date of the meal, establishment where the meal takes place, the business purpose for the expense (or business benefit you gain or expect to gain from the meal), and your business relationship with your guest.

• You’ll need receipts for expenses over $75. (Many clients mistakenly think they have to keep receipts for expenses over $25.) Credit card statements work if you corroborate them by recording the business purpose of the expense in your business diary.

• You can’t deduct meals with your spouse unless you’re traveling together for business. However, you can include the cost of a spouse or other “closely connected” person (such as children or parents) if your guest brings their spouse.

• Don't forget the cost of entertaining at home! You can deduct costs for small gatherings at your home under the same rules that apply when you go out to eat. If you invite more than 12 guests, you can deduct “reasonable” costs if your primary purpose is business. To show compliance, include employees; let guests know your business purpose; discuss and display your product or service at the event.

  Really, why celebrate something as trivial as a birthday, bat mitzvah, or wedding anniversary when you can celebrate 10 years in business, or 15 years at the same location? Just take it from Rick Moranis, playing nebbishy accountant Louis Tully in Ghostbusters:

  "Hey, everybody, this is real smoked salmon from Nova Scotia, $24.95 a pound! Only cost me $14.12 after tax, though . . . . that's why I invited clients, instead of friends."

• Expenses for sporting and theatrical events, golf and boating outings, and similar entertainment are also 50% deductible if they take place directly before or after a substantial, bona fide discussion directly related to the active conduct of your business. Deductions include the face value of tickets (but not a scalper's premium) to sporting and theatrical events, food and beverages, travel and parking expenses, taxes, and tips.

You can deduct a full 100% of the expenses listed below:

• Meals and entertainment for sales seminars and similar events where the meal is integral to the presentation
• Costs for sporting events you organize to benefit charity
• Recreation expenses for your employees
• "Convenience" meals you furnish your employees (and yourself, unless you’re taxed as a proprietor) for the convenience of the business and not for compensation (including meals you furnish on-premises to let employees stay available for emergency calls, meals you furnish during short lunch periods up to 45 minutes, meals you furnish where there aren’t adequate eating places near the workplace, and any meals you furnish to over 50% of employees)
• Off-premises meals you provide as part of required business meetings

Meal and entertainment expenses are easy to overlook -- especially when it comes to entertaining at home. But over time, those little expenses add up. Don't let clients lose out on those easy savings!

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SNEAK PEEK (KAV)
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CLIENT DATA BULK LOADER

Over the years, we've had occasional inquiries from members about a data import utility. Folks want to take client information from their tax prep software and load it directly into TaxCoach. Makes sense on the surface -- except that from the beginning, the tax planning software in TaxCoach has focused on educating the client with plain-English concepts and strategies, based on situation and life-event questions. So there are not a lot of hard numbers and data that directly translate from tax returns.

As time has gone on, however, TaxCoach has evolved ever more into a complete business development and client loyalty tool. The enhanced Client Alerts, the Tax Outlook Letters, and Summary Reports for tax season, just to name a few features, have made TaxCoach all the more effective for a broad client base -- even clients for whom you haven't done a full detail analysis and setup in the system.

So we decided it was time to build a data bridge.

Now in addition to the functional reasons I mentioned above, I'd always resisted doing it for technical reasons too. Having spent a career in systems implementation and data migration, I could see it being a monster. The edits, the validations... error trapping, mechanics, documentation -- ooohhh, the agony. Well I'm pleased to report that, now that we've gotten it constructed and we're nearly done with testing and documentation... I was right!

Nonethless, we're proud to announce here that in the very near future, we'll be unveiling a client import utility for TaxCoach. Now, because so much of what TaxCoach needs is not on any tax return, this utility funnels only the most basic demographic info about clients. To make full use of the tailoring and qualification that TaxCoach contains, you'll still need to make a pass of the detail screens for each client, once loaded, and answer questions like "owe > $10,000 in unsecured debt?". But the import feature will take care of much of the "heavy lifting" -- and leave you and your staff with the higher-end analysis work, instead of the typing.

The input format will be a comma-separated file (.CSV), so that the export from any tax prep package can be arranged in MS Excel to feed it. Watch this space; we'll tell you more next week.

Unless it's the week after.

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MEMBER EVENT (EAL)
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"POWER USER" ROUNDTABLES

For the last several weeks, Keith and I have discussed the series of six "PowerUser" Roundtables across the country this October. You've also seen the complete description that accompanied your most recent TaxCoach Lineup. The first Roundtables in Mission Viejo, CA on October 8 and San Jose, CA on October 10 are now less than a month away. So make sure to book your seat at the table!

PowerUser Roundtables are full-day meetings in small-group settings dedicated to exploring TaxCoach's unique combination of tax-planning and business development tools. No outside speakers. No outside sales pitches. Just Keith and I, walking you step-by-step through using TaxCoach from start to finish:

• How to make tax planning the core of your marketing
• How to sell tax-planning services for premium fees
• How to deliver tax-planning services and build client loyalty
• Member "hot seats"
• Mastermind discussion

We've chosen six locations across the country to make day trips practical for as many of you as we can. And where possible, we've chosen private clubs rather than bland convention hotels:

• Mission Viejo, CA (Coto de Caza Golf & Racquet Club): Wednesday, October 8
• San Jose, CA (Silicon Valley Capital Club): Friday, October 10
• Chicago, IL (The Metropolitan Club): Friday, October 17
• Newark, NJ (Sheraton Newark Airport): Wednesday, October 22
• Baltimore, MD (Tremont Suite Hotel): Friday, October 24
• Tampa, FL (The Centre Club): Wednesday, October 29

We've been pleased with the response we received since we first announced the roundtables. But seats really are limited -- Keith and I are serious about limiting them to the people who fit around the table. So if you're serious about giving your clients proactive tax planning, don't wait: click here for complete details!

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MEMBER EVENT (EAL)
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TOOK ME OUT TO THE BALL GAME

Last Thursday, Keith and I hosted our last "Take Me Out to the Ball Game" of the season. We're pleased to report that our beleaguered Cincinnati Reds came from behind to beat the even-more-hapless Pittsburgh Pirates, 8-6.

We hosted three of these events this year, and the Reds won all three games. Given the team's overall record of 66 wins against 80 losses, we feel fortunate to have seen nearly 8% of the Redlegs' home victories!

We realize not all of you live close enough to Cincinnati to make a game. But All-Star Randall Klein joined us from Houston in July (while here on a trip to see family), and All-Star Greg Sparks and a business partner drove all the way in from Detroit just for last week's game -- then back home the same day! So don't think you have to be "local" to join us!

We'll post next year's schedule as soon as the Reds release it. And if you'd like to take us to see your favorite team, well, we're always open to invitations!

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we can't answer immediately, or we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

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