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SHARED ADVERTISING EXPENSE
Sent to Tax Experts October 11 02:00 PM

I own a company which advertises for customers on TV. Most of these customers are also referred by us to another company for additional services. As a result, both of our companies receive income from servicing these customers. We would like to have the other company pay a portion of our TV advertising expenses, since our advertising results in business for both of our companies. Is there a problem with doing this? Both of our companies receive the benefit of my company's advertising, but I want to make sure their payment for part of our advertising is not considered some sort of a kickback.

 

Customer (name blocked for privacy)
Status:  Closed   Value: $14.95
Answer
October 11 2:13 PM (12 minutes and 55 seconds later)
         
REPLIEDCheck Mark

I would recommend you develop a written agreement between the companies about the services to be provided and make sure the terms are reasonable, market rates. Have the agreement approved by appropriate authority (Boards of Director, etc.) and document the approval. Then have the service providing company invoice the other company just like any other customer and pay the bills.

As long as your arrangement is reasonable relative to similar types of agreements in the open marketplace, you should have no problems.

Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Reply
October 11 3:07 PM (53 minutes and 48 seconds later)
         
Reply to Christopher Phelps's Post: This does not answer my question at all. Thanks for your time.
Customer (name blocked for privacy)
Answer
October 11 11:40 PM (8 hours and 33 minutes and 43 seconds later)
         
REPLIEDCheck Mark

I believe I clearly stated that as long as an agreement regarding the sharing arrangement is reasonable (relative to market rates) there would be no problem.

What specifically do you need answered and I will try to give you my best shot at it?



Edited by chris21 on October 11 2006 at 11:41 PM
Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Reply
October 12 3:02 PM (15 hours and 21 minutes and 20 seconds later)
         
Reply to Christopher Phelps's Post: NO, THANK YOU.
Customer (name blocked for privacy)
Answer
October 14 11:02 PM (2 days and 7 hours later)
         
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Christopher Phelps -- Certified Public Accountant (CPA) -- 100% Positive Feedback on 2667 Tax Accepts
CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
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