Something else to consider - you might be eligible for a whistleblower reward if the IRS collects taxes based on your information. If the amount exceeds $2 million, you could get 15-30% of what they collect. Even for smaller amounts, you might still get something. Just use Form 211 instead of or in addition to Form 3949-A.

I reported my previous employer for almost the exact same thing in 2023. They were calling everyone "contractors" even though we worked regular 9-5 schedules in their building using their equipment. Make sure you document EVERYTHING before you leave - copies of schedules, emails about your duties, anything showing they controlled how/when you worked.

This is exactly the kind of complex tax situation where having proper documentation from day one is crucial. I've seen too many businesses get into trouble with the IRS because they didn't establish clear policies upfront. A few additional considerations that might help: **Allocation Method**: Consider using a "days available" method to allocate costs. If the suite is available 365 days per year, but only used for entertainment 50-60 days, you might be able to argue that a larger portion should be treated as facility rental rather than entertainment. **Business Purpose Documentation**: Create a standard form for each suite usage that captures: date, attendees, business purpose, topics discussed, and outcomes. This becomes invaluable if you face an audit. **Separate the LLC's Books**: Make sure the LLC maintains separate books and records. Each member company should receive detailed K-1s showing their share of different types of expenses (facility rental vs. entertainment). **Consider Revenue Recognition**: Since you mentioned the LLC will have some revenue from reselling unused tickets, make sure you're properly accounting for this income and how it affects the overall deduction calculations. The fact that you're asking these questions upfront puts you way ahead of most businesses. Document everything, work with a qualified CPA, and you should be in good shape. The key is being able to demonstrate legitimate business purpose for the arrangement.

This thread has been incredibly helpful - thank you all for sharing your experiences! I'm seeing a pattern here that proper documentation and allocation methodology are absolutely critical for these suite arrangements. One thing I wanted to add that hasn't been mentioned yet: consider the optics and "reasonableness" test from the IRS perspective. Even if you follow all the technical rules perfectly, luxury suite expenses can still draw scrutiny simply because they seem excessive for smaller businesses. To strengthen your position, I'd recommend: 1. **Comparative Analysis**: Document that the suite arrangement is actually more cost-effective than alternatives (hotel meeting rooms, catering venues, etc.) when used for legitimate business meetings 2. **Industry Benchmarking**: If your industry commonly uses entertainment for client relations, document this as standard business practice 3. **Revenue Connection**: Track and document any actual business generated from suite usage - new clients, deals closed, partnerships formed, etc. 4. **Professional Appearance**: Make sure the suite usage supports your business image and client expectations in your industry The IRS will often challenge luxury expenses not just on technical grounds, but on whether they're "ordinary and necessary" for your specific business. Having a clear business case beyond just tax optimization will serve you well if questioned. Also, since you're in Michigan, be aware that the state may have different rules about what constitutes deductible entertainment expenses, especially if any of the member companies are professional services firms subject to additional restrictions.

Anyone know if this is something the BBB would handle? My grandma swears by reporting everything to them but idk if they actually do anything about tax stuff.

Just wanted to add another perspective - if you're comfortable doing so, consider documenting this with photos or video next time you shop there. Take a picture of the items you're buying, the receipt showing the incorrect tax rate, and maybe even the store's posted prices. This creates a clear paper trail that investigators can use. Also, check if your state has a "whistleblower" protection program for tax fraud reporting. Some states actually offer financial rewards if your report leads to recovered tax revenue, and they provide legal protection against retaliation. Might be worth looking into since this sounds like it could be a significant amount of money they've collected illegally over time. Keep us updated on what happens! These kinds of posts help other community members know what to watch out for.

As someone who's dealt with Box 14 confusion for years, I'd recommend keeping a copy of your pay stubs alongside your W-2. The codes in Box 14 usually match up with deductions you see throughout the year on your paystubs, which can help you understand what each entry represents. For New Jersey specifically, those NJSUI/SDI and NJWFD codes are standard - every NJ employee will see these. The amounts should roughly match what you'd calculate using the percentages Ryan mentioned above. If there's a big discrepancy, that might be worth checking with your payroll department, but otherwise you're all set!

One thing I learned the hard way is to double-check that your employer coded everything correctly in Box 14. Last year my company accidentally put my parking benefits under the wrong code and it caused confusion when I was doing my taxes. Most of the time Box 14 entries are just informational like everyone said, but occasionally there might be something that affects your tax liability. For NJ specifically, those codes you mentioned are totally standard and won't impact your actual tax calculation - they're just showing what was already withheld. But it's always worth taking a few minutes to understand what each entry means, especially if you see any codes you don't recognize. Better to ask now than get surprised later!

Just wanted to chime in as someone who's dealt with similar roofing capitalization questions on my rental properties. One aspect that hasn't been fully explored here is the potential for a cost segregation study, especially on a 32-unit complex like yours. With a $135k roof coating, you might want to consider having a cost segregation specialist evaluate whether any components of the work could qualify for shorter depreciation periods. Sometimes roofing work includes elements that could be classified as land improvements (15-year property) or even personal property (5-7 year property) rather than being lumped entirely into the building improvement category. For example, if the coating work involved any drainage improvements, walkways, or equipment installations, those might qualify for accelerated depreciation. On a project of this size, even if only 10-20% of the cost could be reclassified to shorter lives, it could meaningfully impact your cash flow. Cost segregation studies typically pay for themselves on properties with significant recent improvements, and your situation with both the coating work and an established rental portfolio might make it worthwhile to explore. Just another angle to discuss with your accountant when they return from vacation!

For roof coating specifically, cost segregation opportunities might include items like new roof drains, HVAC equipment supports that were upgraded during the coating process, or any electrical work for roof lighting/safety systems. However, I'd caution that pure coating application typically stays with the building structure. Regarding timing - you generally need to make the cost segregation election by the due date (including extensions) of the return for the year the property was placed in service or improved. However, there are "catch-up" provisions under Section 481(a) that allow you to make changes for prior years, though this requires filing Form 3115 (Application for Change in Accounting Method). One practical tip: if you're doing financial projections now, you could model scenarios both with and without potential cost segregation benefits. Assume maybe 10-15% of the $135k could potentially be reclassified to 5-7 year property (roughly $13-20k), and see how that impacts your projections. This way you'll have numbers ready for discussion when your accountant returns. The key is getting a qualified cost segregation specialist involved early - they can often identify opportunities that aren't obvious to general practitioners. Given your 32-unit complex, this might be worth exploring beyond just the roof coating for other building components as well.