Do I have to report a thank-you dinner as income to the IRS?

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Caduceus
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Do I have to report a thank-you dinner as income to the IRS?

Post by Caduceus »

If someone buys you dinner for helping them with something, does that count as income that you should report? On the one hand, it seems to make sense that it should, otherwise folks can just buy all sorts of expensive things as gifts in lieu of money payments and evade tax. On the other hand, it seems like this must happen a lot as a goodwill gesture among friends or neighbors, and I don't know of anyone ever thinking of reporting this as income on their tax forms.

Which is it?
basspond
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by basspond »

You are legally allowed to gift an individual $14k a year. So you can gift them your service and they can gift you their appreciation. You can't do this if you are doing the service for their business. It's called personal not business gift. There is a business gift exception of only $25.00.
barnaclebob
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by barnaclebob »

If the situation is as you state and it was appreciation for helping someone and you aren't stretching the definition of the word help then don't worry about it.
flyingaway
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by flyingaway »

Caduceus wrote: Mon Nov 20, 2017 2:43 am If someone buys you dinner for helping them with something, does that count as income that you should report? On the one hand, it seems to make sense that it should, otherwise folks can just buy all sorts of expensive things as gifts in lieu of money payments and evade tax. On the other hand, it seems like this must happen a lot as a goodwill gesture among friends or neighbors, and I don't know of anyone ever thinking of reporting this as income on their tax forms.

Which is it?
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SRenaeP
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by SRenaeP »

basspond wrote: Mon Nov 20, 2017 4:22 am You are legally allowed to gift an individual $14k a year. So you can gift them your service and they can gift you their appreciation. You can't do this if you are doing the service for their business. It's called personal not business gift. There is a business gift exception of only $25.00.
I'm pretty sure the IRS considers that bartering and it's considered income and may be taxable.

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Gill
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by Gill »

There is no quid pro quo in your hypothetical and therefore no income. Varying the facts could result in income such as if you were in the business of washing house windows in return for a case of wine.
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by Gill »

SRenaeP wrote: Mon Nov 20, 2017 9:25 am
basspond wrote: Mon Nov 20, 2017 4:22 am You are legally allowed to gift an individual $14k a year. So you can gift them your service and they can gift you their appreciation. You can't do this if you are doing the service for their business. It's called personal not business gift. There is a business gift exception of only $25.00.
I'm pretty sure the IRS considers that bartering and it's considered income and may be taxable.

-Steph
Yes, it is bartering. The $25 item is the limit of deductibility of business gifts and does relate to income of the donee. As a practical matter, here we go once again trying to be holier than the Pope.
Gill
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3funder
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by 3funder »

I'm pretty sure both you and the IRS have other, more important things to worry about.
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Artful Dodger
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by Artful Dodger »

As you state it, a goodwill gesture between friends or neighbors does not constitute income. That's how I read your query. A neighbor comes over with his chain saw and helps you clear your lot. If you paid for this, it might be $200-$400. But, when a friend helps you do the same thing, it isn't a business transaction, it's a friend helping you out. So, you take he and his spouse with your SO, and go out to dinner.

And, even if there is a business purpose, receipt of a dinner is not income for tax purposes. I have a business. I take my client, his wife, my wife, out to dinner and during the dinner discuss some business. The only requirement for tax purposes is I am allowed to deduct 50% of the cost of the dinner from my business income.
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flamesabers
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by flamesabers »

3funder wrote: Mon Nov 20, 2017 2:42 pm I'm pretty sure both you and the IRS have other, more important things to worry about.
+1.

While having to pay taxes is a certainty in life, that doesn't mean everything you do in life has to be related to taxes.
livesoft
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by livesoft »

I was teaching a few weeks ago at a foreign university. I was taken out many times to very nice restaurants for fabulous dinners that I didn't have to pay for. I am sure somebody put them on their expense account. I gained 10 lbs in less than a week. I am not going to pay taxes on my weight gain.
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whatusername?
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by whatusername? »

flamesabers wrote: Mon Nov 20, 2017 4:30 pm
3funder wrote: Mon Nov 20, 2017 2:42 pm I'm pretty sure both you and the IRS have other, more important things to worry about.
+1.

While having to pay taxes is a certainty in life, that doesn't mean everything you do in life has to be related to taxes.
+2. It's not a reported transaction, and it wouldn't show up on your financial records that would be examined in the event of an audit. I mean, good for you for honesty, but this is a potential transgression not likely to ever be noticed.
TravelforFun
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by TravelforFun »

The most important question no one has asked the OP. How expensive was the dinner? Did they fly you first class to Paris to dine at the Ritz to thank you for something you did for them?

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bottlecap
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by bottlecap »

We can all dance on the head of a pin. You have to figure this one out on your own.

But if you do a favor for someone without the expectation of payment and they later treat you to dinner on their own volition, all you have here is two "gifts" exchanged.

Now if you helped them with the expectation of getting your dinner paid for, we can go back to dancing.

Translation: I wouldn't worry about it unless this was actually an exchange for services or the dinner was $14,001.00+.

Good luck,

JT
whomever
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by whomever »

I'll leave the legalities to the lawyers, and I'll leave everyone to their personal ethics, and talk about the practicalities.

We're on good terms with our neighbors. That involves a lot of exchanges of goods or labor. I'll give them something that's surplus to my needs for free, where I would sell it to a stranger, and vice versa. Sometimes we shovel the shared driveway, sometimes they do. When they have a family emergency we watch their kids, and when we have one they walk/feed our dog. We'll help them on their house projects and vice versa. We have them over for dinner, and vice versa.

Most of it isn't strictly quid quo pro, but some is. We might take them cookies just to be nice, but we darn sure do if they watched the dog for a week while we went to a funeral.

We don't report any of that as income or expenses. I think doing so would be very unusual. It would be very counterproductive for a society to try and track and tax those kinds of things. God forbid I shovel the walks of the poor widow down the street who's barely scraping by on social security, and cause her a tax bill. In general, I submit that the expense of tracking and reporting that kind of thing would A)likely exceed the benefit (which is counterproductive by itself) and B)tend to discourage that kind of exchange, which would be terrible for society; that kind of mutual aid is the glue that makes societies work.
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Earl Lemongrab
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Re: Do I have to report a thank-you dinner as income to the IRS?

Post by Earl Lemongrab »

whomever wrote: Mon Nov 20, 2017 6:20 pm Most of it isn't strictly quid quo pro, but some is. We might take them cookies just to be nice, but we darn sure do if they watched the dog for a week while we went to a funeral.
No. It would only be quid pro quo if the neighbor would not dogsit unless you gave them cookies. Then it becomes a barter situation. The fact that you plan to give them cookies is irrelevant.
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