b'(continued from page 3)of theultimatepayor test produces 2.During the meal or entertainment,somewhat differentresultswithemthe taxpayer must actively engageployees than with non-employees, as in a business meeting, negotiation,the following guidelines illustrate: discussion or other bona fide busi a)If the employeeisnot reimbursi,,,.~ ness discussion {hence,repudia bytheemployer foradeductible the tion of the "quiet meal" doctrine}.expenditure,theemployeemay deduct%ofofitem. 3.Theprincipalnatureoftheex 80 the costthe penditure must be the active conduct(Othertaxlawprovisions limit an oftaxpayer\'s trade or business.individual taxpayer\'s miscellaneous theitemized deductions to amounts in 4.Theor entertainment expense mealexcess of 2% of the taxpayer\'s admust be for the taxpayer, his busi justed gross income.) MIDWEST ROOFINGness guest, and their spouses. CONTRACTORSSimilarly, a meal or entertainmentb)If theemployeeisreimbursedby ASSOCIATION, INC.expenditure will be considered "associ the employer, the reimbursing em1440 Commerce Bank Bldg.atedwith"thetaxpayer\'stradeorployer may deduct the80%. 1000 Walnutbusiness if the following two tests arec)If anon-employee{fortheseexKansas City, MO 64106-2123amples, a customera client} does (816) 421-MRCAsatisfied:or 1.The expenditure must have a clearnot reimburse the party making the OFFICERSbusiness purpose.expenditure (for these examples, a THOMAS BOLLNOWcontractor),thepaying party may President2.Theentertainmentmustdirectlydeduct the80%. Westmont, Illinoisfollow or precede a substantial andd)The difficult situation arises when ROBERT M. DALSINbona fide business discussion.a customer reimburses the contractor Vice PresidentNodeductionswillbe allowed for(thecontractorwilloccasionally Minneapolis, Minnesotalavishorextravagant expenses.Theinclude the cost of the meals and DAVID KIELPINSKItaxpayer must be present at the mealentertainment in a monthly billing, Vice Presidentor entertainment for the deduction towhichwillbethe paid bycustomer). Milwaukee, Wisconsinapply,andthedeductioncannot beThe contractor in this instance has DOUGLAS 0 . KIRBERGused iftwo options: theexpense and the "substantial distractions" exist Secretary-Treasurerat the meeting (such as atreimbursement can be ignored by a nightclub} St. Louis, Missouriwhich would inhibit the conduct of atheundertheorye contractorthethDIRECTORSbusiness discussion.the customer is the ultimate payo GRADY BARRIfexpenditure is determined to(assuming the contractor can provide the Abilene, Texasbe deductible, the allowable percentagethe customeradequate withrecords MICHAEL D. BELDONof the cost constituting the deductionsubstantiatingthedeductibleexSan Antonio, Texasand the party to whom the deductionpense), orhe contractor can t report ANDREW B. BUCKNERapplies mustcalculated. Generally,the reimbursement as income and be Indianapolis, Indianaanexpenditurewhichisproperlytake the80%deduction. GEORGE COVINGTONdeductible will be allowedthe extentAsshould beexpected,numerous to Conway, Arkansasof80%of the item\'scost. The partyexceptions to these general rules exist. CLIFFORD JOHNSONwhoisdeemedtobethe"ultimateConsult yourorney or accountant att to Tulsa, Oklahomapayor"of thecostwillbe th~P8;ftYascertain howthese tax law changes GARY E. KODERallowed the deduction.apphcat10napply to your specific circumstances. The Tucson, Arizona NICHOLAS D. BECHTEL Dayton, OhioMidwest Roofing Contractors Assn. 1440Commerce Bank BuildingFirst Class STEVENL.DOUGLASSU.S. POSTAGE Garden City, Kansasl000WalnutPAID DAVID B. KNUTSONKansasCity,Missouri64106-2123Kansas City, MO Scottsbluff, Nebraska Permit No. 754 ARNOLD L. KWIKKEL Rock Rapids, Iowa ANTHONY M. SPIGARELLI Minneapolis, Minnesota JOHN D. STEPHENSON Maryland Heights, Missouri GEORGE S. MOELLER Chairman of Board Kansas City, Missouri STAFF BARBARA D. MYERS Executive Director JUDITH A. SLAVENS Administrative Secretary Page4'