Client-reimbursed business expenses

[IndianaResidentx]

Situation: my wife is an event planner. Occasionally she has to pay bills for her clients. Example: picking up the bar tab when the father of the groom is too distracted, or paying the restaurant bill for a rehearsal dinner. The client later pays her back for these items. How should she report these items on schedule c? If she reports them as "meals" (50% deductible) then her income will be over reported. She of course didn't eat a meal herself - just paid the bill as a service. So what category would the bills go into? Thank you!

 

[Taxing Matters]

So what category would the bills go into? Thank you!

I'd simply write those expenses in Part V as "advanced client event costs" or something similar.

 

[LdiJ]

Situation: my wife is an event planner. Occasionally she has to pay bills for her clients. Example: picking up the bar tab when the father of the groom is too distracted, or paying the restaurant bill for a rehearsal dinner. The client later pays her back for these items. How should she report these items on schedule c? If she reports them as "meals" (50% deductible) then her income will be over reported. She of course didn't eat a meal herself - just paid the bill as a service. So what category would the bills go into? Thank you!

I would create a different category under "other expenses" for client or event expenses.