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CLICK HERE to Register for a free account and login for a smoother ad-free experience. It's easy, and only takes a few moments.The deductiblity of the expenses has nothing to do with the perk her recieves for using the credit card.
If his business is home building and he puts the cost of materials on the credit card or pays cash it makes no difference to the deductibility.
The fact that by paying on the credit card earns him something from the credit card has nothing to do with the nature of the expense.
I would assume the value of the tickets would be declarable as income, but the deductions would not be affected.
Ok gotta say this. Who gives a crap about them? Btw I am one of them, but good for him its absolutely intended to use the card that way. Using a credit card to jimmy open a lock is using it in a way not intended. He spent his hard earned cash on his business and was rewarded for it good for him. When my business gets really going I hope to have this same opportunity to me but if not I aint gonna **** on someone who can cause thats just chilidish
How is that consistent with your original post that this is about the worst idea you have ever heard?
That seems to be the consensus on the questions I raised and I appreciate your feedback as well as that of others; the benefit is probably taxable, but the IRS won't bother him unless someone drops a dime or he gets audited for doing something that the auditor decides is "in the face" of the IRS.
The broader public policy question, perhaps outside the purview of this board, seems to be whether it is "fair" that someone who owns a business, with material, tax deductible expenses, can manage the payment of those expenses in such a way that s/he obtains a material personal benefit, quantifiable in arms-length terms (the season tix are valued at the time of their sale).
Since corporations are "individuals," let's take an extreme, hypothetical example. A much larger, privately owned corporation (pick one; you could start with Walmart or Fidelity Investments and work your way down) somehow manages, thanks to smart accountants and lawyers, to funnel $100 million of expenses through a credit card program. It then takes the benefits gained from that exercise and provides them as a benefit to the owner's family and to its Board Members, lavishing gifts upon them. Is that OK? As a taxpayer, you're subsidizing their ability to do that by allowing them a deduction for their expenses. In turn, they are providing a tax free benefit to their Directors.
Don't try to argue about the relative size of the benefits provided by Walmart and the OP. I'd remind you of the old story: A very rich man goes up to a very beautiful woman and asks him if she will spend the night with him for $10 million. She hesitates for a nanosecond and says, "Yes," practically falling out of her dress. He then steps back and says, "Well, in that case, would you sleep with me for $100." She pulls her skirt back up and responds, "Never. What kind of a woman do you think I am." He responds, "Well, Ma'am, we've already established that. Now we're just haggling over the price."
Those of you envious, take the personal risk and hard work and start your own company. Thankfully many people DO, and thereby provide employment for many.
stupid analogy cause this isn't Walmart, this guy probably puts in 80 hrs a week like many of us SBO (Small biz owners) do. We work as asses off and are no way close to those Walmart exec you try to lump us into. Thanks for completly missing the point that this guy has earned his tix just not the conventional way.
OK, here's another way around the season ticket waiting list.
Over the next three years, every month send $33 million to your credit card company, and bank it. With the investment and interest, at the end of three years, you could buy the team.
Then sit in the owner's box.
That seems to be the consensus on the questions I raised and I appreciate your feedback as well as that of others; the benefit is probably taxable, but the IRS won't bother him unless someone drops a dime or he gets audited for doing something that the auditor decides is "in the face" of the IRS.
The broader public policy question, perhaps outside the purview of this board, seems to be whether it is "fair" that someone who owns a business, with material, tax deductible expenses, can manage the payment of those expenses in such a way that s/he obtains a material personal benefit, quantifiable in arms-length terms (the season tix are valued at the time of their sale).
Since corporations are "individuals," let's take an extreme, hypothetical example. A much larger, privately owned corporation (pick one; you could start with Walmart or Fidelity Investments and work your way down) somehow manages, thanks to smart accountants and lawyers, to funnel $100 million of expenses through a credit card program. It then takes the benefits gained from that exercise and provides them as a benefit to the owner's family and to its Board Members, lavishing gifts upon them. Is that OK? As a taxpayer, you're subsidizing their ability to do that by allowing them a deduction for their expenses. In turn, they are providing a tax free benefit to their Directors.
Don't try to argue about the relative size of the benefits provided by Walmart and the OP. I'd remind you of the old story: A very rich man goes up to a very beautiful woman and asks him if she will spend the night with him for $10 million. She hesitates for a nanosecond and says, "Yes," practically falling out of her dress. He then steps back and says, "Well, in that case, would you sleep with me for $100." She pulls her skirt back up and responds, "Never. What kind of a woman do you think I am." He responds, "Well, Ma'am, we've already established that. Now we're just haggling over the price."
So, when XYZ Corporation is given a 100 million tax break, and the politcal disinformation is that 'we give money to the big corporations, at the expense of the little guy' understand that this 100million first had a purpose (the tax break was an incentive for something) second very likely kept thousands of Americans working, and 3rd created additional profit for the 'owners of XYZ' which turn out to be YOU AND I.
First, i cannot imagine how it is a public policy question.
It is a credit card company offering a perk for you to use their service. It's like saying when the grocery store has spam for buy one get one free, if Walmarty bought every employee a can of spam for Christmas, its a matter of public policy that they got so many free cans of spam.
First off, those Walmart employees would be expected to pay taxes on "gifts" from their employer.
But more significantly, a typical customer loyalty reward is for YOUR business. You buy ten lattes, your next latte is free. But credit card perks -- particularly for business users -- are for forcing SOMEBODY ELSE to do business with the credit card company. That's why one is a reward, the other a kickback.
Though small corporations (ones with 100 or fewer shareholders) aren't subject to double-taxation if they elect to incorporate as an S-corporation.Not that I'm for special interest corporate welfare for the politically connected but folks should know that corporate earnings are taxed twice in this country. First the corporate income tax on profits, and secondly as the dividends the companies pay to shareholders from these profits are taxed as dividend income to the shareholders.
... the OP did nothing wrong, and DEFINITELY didn't "use the card in a way it wasn't intended."
OK, I was going to stay out of this being a minority dissenter here, but seeing that my own words have been tossed back at me, I'll respond: No, the OP did nothing technically wrong; however, I'll venture that the WAY he went about it was not how the Patriots perks program was intended. That is, funneling high volumes of business dough through a credit card program designed for personal use over a relatively short period of time with sole intent of collecting the prize. He said it himself: "a way around the waiting list." So, I suppose any business person with the means to do so, if they are so inclined, can leap-frog the wait list to grab season tickets. Each person who does this ensures that those on the waiting list (folks of "lesser means") will have to wait that much longer, assuming a certain number of seats aren't reserved for the promotion. I've seen these cards hawked at the games: They're intended for personal accounts, not as business cards.
Folks bemoaning the continuing "corporatization" of football at the expense of the common joe might see this as another small example of money trumping fan loyalty -- in this case, to the detriment of folks who've languished on the list for years with the team at its peak.
Again, he did nothing wrong in a technical sense. Whether it was done with a sense of fairness and propriety might be open to question. But life sure ain't fair, and we all know that "finding your way around something" as a short-cut to gratification is applauded in this society.
I know my perspective on this will be slammed, so have at it. But first, I'd like to mention that I've had Patriots season tickets since 1994 and have been a self-employed businessman since '95.
OK, I was going to stay out of this being a minority dissenter here, but seeing that my own words have been tossed back at me, I'll respond: No, the OP did nothing technically wrong; however, I'll venture that the WAY he went about it was not how the Patriots perks program was intended. That is, funneling high volumes of business dough through a credit card program designed for personal use over a relatively short period of time with sole intent of collecting the prize. He said it himself: "a way around the waiting list." So, I suppose any business person with the means to do so, if they are so inclined, can leap-frog the wait list to grab season tickets. Each person who does this ensures that those on the waiting list (folks of "lesser means") will have to wait that much longer, assuming a certain number of seats aren't reserved for the promotion. I've seen these cards hawked at the games: They're intended for personal accounts, not as business cards.
Folks bemoaning the continuing "corporatization" of football at the expense of the common joe might see this as another small example of money trumping fan loyalty -- in this case, to the detriment of folks who've languished on the list for years with the team at its peak.
Again, he did nothing wrong in a technical sense. Whether it was done with a sense of fairness and propriety might be open to question. But life sure ain't fair, and we all know that "finding your way around something" as a short-cut to gratification is applauded in this society.
I know my perspective on this will be slammed, so have at it. But first, I'd like to mention that I've had Patriots season tickets since 1994 and have been a self-employed businessman since '95.
If you are what you say ... let me ask you a question do you really think a huge privately owned biz has to do these tactics to gain season tickets???