[Anonymous]

I need someone to help me find the IRC authority on this question.

I work for a c-corp where the boss and their spouse are both officers and both draw a salary. They pay 100% of their own and health insurance from the company as well as have both of their children on their policy – and the company pays 100% of that too. I’m the only other salaried person in the company.

All the hourly people as well as myself have been offered health insurance, with the company paying half of the premuim for the employee…and the employee must pay 100% of their family share. Boss and family have the company pay 100% of their family dental and vision, while for myself and other rank and file the cost burden is 100% on the employee.

I think the company can “discriminate”, but only salary versus hourly, etc….but not HCE versus rank and file. Is this true? After I address this issue, then I need to address all of the food and alcohol purchases made at “big box store” being classified as “meals and entertainment” and fuel for the children’s cars (and their monthly cell phone costs) classified as “ordinary business expenses”, thus helping to create an annual loss and creating question(s) about going concern.

Oh the fun of working at a “family owned business” where the owner’s spouse puts in 3 hours per day, 4 days per week, for $30,000/year plus benefits.

[runnerup]

As far as I know, a company is allowed to discrimate if it is a fully insured plan. This is supposed to change under Obamacare.

REG 10/12/13 - 94
FAR 10/17/13 - 93
AUD 11/11/13 - 92
BEC 11/20/13 - 87
ethics 11/27/13 - 92%

[runnerup]

As far as I know, a company is allowed to discrimate if it is a fully insured plan. This is supposed to change under Obamacare.

REG 10/12/13 - 94
FAR 10/17/13 - 93
AUD 11/11/13 - 92
BEC 11/20/13 - 87
ethics 11/27/13 - 92%

[evesocal]

>I think the company can “discriminate”, but only salary versus hourly, etc….but not HCE versus rank and file. Is this true? <

Without looking it up, I think they are allowed to discriminate with health insurance.

>After I address this issue, then I need to address all of the food and alcohol purchases made at “big box store” being classified as “meals and entertainment” and fuel for the children's cars (and their monthly cell phone costs) classified as “ordinary business expenses”, thus helping to create an annual loss and creating question(s) about going concern.<

Just out of curiosity, what is your role in this company? Internal auditor? Classifying personal expenses as business is wrong no matter what although, to coin a phrase, it is done all the time. If they are audited the IRS will ask for evidence to support the business purpose of the expenses.

B: 75
R: 80
A: 77
F: 81
Ethics: 84, 92 and done!
Licensed in California

[evesocal]

>I think the company can “discriminate”, but only salary versus hourly, etc….but not HCE versus rank and file. Is this true? <

Without looking it up, I think they are allowed to discriminate with health insurance.

>After I address this issue, then I need to address all of the food and alcohol purchases made at “big box store” being classified as “meals and entertainment” and fuel for the children's cars (and their monthly cell phone costs) classified as “ordinary business expenses”, thus helping to create an annual loss and creating question(s) about going concern.<

Just out of curiosity, what is your role in this company? Internal auditor? Classifying personal expenses as business is wrong no matter what although, to coin a phrase, it is done all the time. If they are audited the IRS will ask for evidence to support the business purpose of the expenses.

B: 75
R: 80
A: 77
F: 81
Ethics: 84, 92 and done!
Licensed in California

[sonygal57]

What I see is that health insurance may be discriminatory…please see the hyperlinked website…it may help with the medical info

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CHUQFjAG&url=http%3A%2F%2Frogersbenefit.com%2Fuploads%2FTulsa%2FPrincipal%2520-%2520Non%2520Discrimination%2520Testing%2520Guide.pdf&ei=DdyvUrCmNofooASw_4GIDA&usg=AFQjCNGjAOgoj7vGNGgaca-JJy563aenrg&sig2=-aMWdM7kQeCgzcaUJeCMVg&bvm=bv.57967247,d.cGU

Check pub 535 and 463 for the meals and entertainment deductions…along with the questionable personal deductions. Also see page 14 of 1120C instructions…the 1120C instructions actually refer to pub 463. As far as cell phone costs and gas reimbursements it just depends on the portion used for business…If there is a business purpose then all is well, if not well then you got them there. That being said If you research tax court cases I am sure you will find some things that will help. As far as dinner expenses between the “married” owners I don't think the IRS will allow those meals even if business was discussed.

Hope this helps…

Good old Gandalf, "All we have to do is decide what to do with the time that is give to us."
"Not all those who wander are lost."

FAR: I slayed the Dragon!
BEC: I defeated the Siren!
AUD: I eliminated Medusa!
REG: ?????

[sonygal57]

What I see is that health insurance may be discriminatory…please see the hyperlinked website…it may help with the medical info

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CHUQFjAG&url=http%3A%2F%2Frogersbenefit.com%2Fuploads%2FTulsa%2FPrincipal%2520-%2520Non%2520Discrimination%2520Testing%2520Guide.pdf&ei=DdyvUrCmNofooASw_4GIDA&usg=AFQjCNGjAOgoj7vGNGgaca-JJy563aenrg&sig2=-aMWdM7kQeCgzcaUJeCMVg&bvm=bv.57967247,d.cGU

Check pub 535 and 463 for the meals and entertainment deductions…along with the questionable personal deductions. Also see page 14 of 1120C instructions…the 1120C instructions actually refer to pub 463. As far as cell phone costs and gas reimbursements it just depends on the portion used for business…If there is a business purpose then all is well, if not well then you got them there. That being said If you research tax court cases I am sure you will find some things that will help. As far as dinner expenses between the “married” owners I don't think the IRS will allow those meals even if business was discussed.

Hope this helps…

Good old Gandalf, "All we have to do is decide what to do with the time that is give to us."
"Not all those who wander are lost."

FAR: I slayed the Dragon!
BEC: I defeated the Siren!
AUD: I eliminated Medusa!
REG: ?????

[Author]

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