Insight Article For example, if a bank occasionally provides coffee or doughnuts to its employees, the cost of doing so is classified as de minimis benefits and would not be subject to the 50 percent limit. Occasional group meals or cocktail parties would also fall under this exception. Another example of a de minimis M&E expense is providing a meal or money to an employee in order to extend the employee’s normal work schedule due to overtime requirements. The meal offered during overtime qualifies as a de minimis benefit. general ledger accounts (one for 50 percent M&E deductions and one for fully deductible M&E expenses) will help to avoid this distinction being missed when the tax returns are prepared. Once identified, any expenses that are exceptions to the 50 percent limit can be booked to the appropriate general ledger account.

Doing so will allow you to get the maximum benefit for your M&E deductions going forward. Entertainment Costs for Charitable Purposes About the Author Ticket costs to sporting events that are arranged primarily for charitable purposes are exempt from the 50 percent limit. In order for these expenses to be fully deductible, the event must be organized with the main intent being to benefit a §501(c)(3) taxexempt organization, all of the net proceeds must benefit the charity, and volunteers must perform substantially all the work in carrying out the event. Kim Massopust is a tax manager who focuses most of her time within Wipfli LLP’s financial institution practice. Since joining the firm, Kim has used her experience and attention to detail to assist clients with their various tax needs.

In addition to serving financial institutions, she also enjoys working with many corporate and high-net-worth individual clients. Kim can be reached at kmassopust@wipfli.com. For example, if you purchase tickets to a golf tournament where the above criteria are met, the deduction may qualify as a fully deductible charitable donation (subject to charitable limits), rather than being subject to the 50 percent M&E limit. Tracking M&E Expenses Once you’ve identified M&E expenditures that fall into one of these exception categories, tracking them appropriately becomes equally important. Many banks record all of their M&E costs to one general ledger account.

When the federal tax return is prepared, this account is typically reduced by 50 percent for tax purposes. If there are items included in that account that fall into one of the exceptions discussed above, you may be missing out on significant deductions. It is essential to identify these excluded items on the front end and track the costs separately from your other M&E account. Having two © Wipfli LLP About Wipfli LLP The mission of Wipfli’s Financial Institutions Practice is to educate, advise, and assist financial institutions in successfully navigating the complex environment they face.

Our clients range from small community financial institutions to multi-billion dollar organizations. The practice consists of certified internal auditors, certified compliance specialists, former financial institution personnel, former regulators, and licensed certified public accountants regionally recognized for their knowledge and expertise. Whether your needs include regulatory compliance, profit improvement, risk management, strategic planning/board development, information technology, audit, or tax, let our experts assist you. For more information, visit www.wipfli.com. 2 .