As we head into our peak season for filing tax returns, we want to remind you about allowable owner fringe benefits under the US Tax Code.
Whenever we bring owner fringe benefits up to clients, we invariably get one of two questions:
- Is that really okay?
- Does this impact my business value?
First, question A. Yes, it is okay! Please know that we’d never recommend a strategy if it hadn’t been tested both in tax court and within the BGW client base under scrutiny with the IRS. This is perfectly legal and ethical.
Question B? No, taking advantage of owner fringe benefits does not impact business value. These would all be considered add-backs when arriving at EBITDA.
Please find below a list of allowable owner fringe benefits. We encourage you to look through it and figure out what you spent in 2023 to see if you can find any deductions. This is like getting a 35% discount on what you paid because you are paying for the items pretax instead of post-tax, so don’t skip it! Use this guide as a reference. It’s some of our best thinking, and it’s thorough (everything on this list has been through an audit and passed) -- meaning, if it’s not on the list, it’s probably not allowable.
BGW's List of Owner Fringe Benefits