Yeo & Yeo, a leading Michigan-based accounting and advisory firm, is pleased to announce the recent promotion of five individuals to principal effective January 1, 2024. The new principals include Andrew Matuzak, CPA, PFS; Mike Rolka, CPA, CGFM; Christopher Sheridan, CPA, CVA; Rachel Van Slembrouck, CPA; and Alex Wilson, CPA.
“I am excited to have so many talented professionals joining our principal group,” says Dave Youngstrom, President & CEO. “They each bring distinct strengths and a commitment to personal growth, client service, and care for our people. I look forward to working with each of them more closely and seeing them continue their successful careers.”
Andrew Matuzak, CPA, PFS, is based in the Saginaw office. Matuzak co-leads Yeo & Yeo’s Trust/Estate/Gift Tax Services Group and the Death Care Services Group. He specializes in financial and retirement planning, as well as tax planning, and trust and estate administration. Matuzak is a member of the Michigan Funeral Directors Association and the Michigan Cemetery Association, and serves on the Northeastern Michigan Estate Planning Council board. He frequently contributes to Yeo & Yeo’s Everyday Business Podcast, educating listeners on tax, trust and estate, and wealth management topics. In the community, he serves as treasurer of the Thomas Township Business Association, treasurer of the Rotary Club of Saginaw Valley, and is a member of the Saginaw Valley State University Advisory Board Council.
Mike Rolka, CPA, CGFM, is based in the Auburn Hills office, specializing in audits of governmental entities. Rolka began his career in the Saginaw office and later transferred to the Auburn Hills office to support and help expand the firm’s audit and assurance services in the southeast Michigan market. He is a member of the Government Services Group and holds the Certified Government Financial Manager designation. He is a member of the Michigan Association of Certified Public Accountants’ Governmental Accounting and Auditing Professional Panel. He also serves on the Board of Directors and Standards Committee for the Michigan Government Finance Officers Association (MGFOA). In the community, Rolka serves on the Clinton River Watershed Council Finance Committee.
Christopher Sheridan, CPA, CVA, leads the Business Valuation and Litigation Services Group and is a member of the Manufacturing Services Group. Based in the Saginaw office, he works with clients in various industries, offering consulting for financial reporting, tax issues, internal controls, and fraud prevention. He is a member of several professional organizations, including the Michigan Association of Certified Public Accountants’ Manufacturing Task Force, Great Lakes Bay Manufacturers Association, Central Michigan Manufacturers Association, and Michigan Manufacturers Association. In 2021, he was recognized as a “40 Under Forty” honoree by the National Association of Certified Valuators and Analysts / CTI. In the community, Sheridan serves on the board of the Montessori Children’s House of Bay City, Bay Future, and the Great Lakes Bay Economic Club. He is also an executive council member for the Stevens Center for Family Business.
Rachel Van Slembrouck, CPA, is based in the Saginaw office and is a member of the Healthcare Services Group. She specializes in outsourced accounting, strategic advisory services, client accounting software solutions, and tax planning and preparation. She has played a pivotal role in broadening the firm’s outsourced accounting offerings and assumed a lead role in guiding clients through the challenges of the PPP program amid the pandemic. She is highly knowledgeable in the Employee Retention Credit and is a QuickBooks ProAdvisor. In 2018, she was recognized with the Spirit of Yeo Award for going above and beyond to exemplify the firm’s mission and core values in serving our clients, communities, and people. In the community, she serves as a board member and is past chair of the Saginaw County Animal Care & Control Advisory Council.
Alex Wilson, CPA, is co-leader of the Cannabis Services Group, playing a key role in the firm’s entry into this industry and acquiring specialized expertise. He is also a member of the firm’s Agribusiness Services Group and Construction Services Group. He specializes in business advisory services, succession planning, and tax planning and preparation. Wilson is a member of many professional organizations, including the Michigan Association of Certified Public Accountants’ Agribusiness Task Force, Construction Industry CPAs/Consultants Association, and Associated Builders and Contractors – Greater Michigan. Demonstrating a profound commitment to community service and upholding the values of the firm, Wilson serves as the Yeo & Yeo Foundation’s board president. He is also the board treasurer of the Children’s Discovery Academy and serves on the Central Michigan University Accounting Advisory Council. He is based in the firm’s Alma office.
If you read the Internal Revenue Code (and you probably don’t want to!), you may be surprised to find that most business deductions aren’t specifically listed. For example, the tax law doesn’t explicitly state that you can deduct office supplies and certain other expenses. Some expenses are detailed in the tax code, but the general rule is contained in the first sentence of Section 162, which states you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.”
In general, an expense is ordinary if it’s considered common or customary in the particular trade or business. For example, insurance premiums to protect a store would be an ordinary business expense in the retail industry.
A necessary expense is defined as one that’s helpful or appropriate. For example, let’s say a car dealership purchases an automated external defibrillator. It may not be necessary for the operation of the business, but it might be helpful and appropriate if an employee or customer suffers cardiac arrest.
It’s possible for an ordinary expense to be unnecessary — but, in order to be deductible, an expense must be ordinary and necessary.
In addition, a deductible amount must be reasonable in relation to the benefit expected. For example, if you’re attempting to land a $3,000 deal, a $65 lunch with a potential client should be OK with the IRS. (Keep in mind that the Tax Cuts and Jobs Act eliminated most deductions for entertainment expenses but retained the 50% deduction for business meals.)
Examples of taxpayers who lost deductions in court
Not surprisingly, the IRS and courts don’t always agree with taxpayers about what qualifies as ordinary and necessary expenditures. Here are three 2023 cases to illustrate some of the issues:
- A married couple owned an engineering firm. For two tax years, they claimed depreciation of $76,264 on three vehicles, but didn’t provide required details including each vehicle’s ownership, cost and useful life. They claimed $34,197 in mileage deductions and provided receipts and mileage logs, but the U.S. Tax Court found they didn’t show any related business purposes. The court also found the mileage claimed included commuting costs, which can’t be written off. The court disallowed these deductions and assessed taxes and penalties. (TC Memo 2023-39)
- The Tax Court ruled that a married couple wasn’t entitled to business tax deductions because the husband’s consulting company failed to show that it was engaged in a trade or business. In fact, invoices produced by the consulting company predated its incorporation. And the court ruled that even if the expenses were legitimate, they weren’t properly substantiated. (TC Memo 2023-80)
- A physician specializing in gene therapy had multiple legal issues and deducted legal expenses of $360,295 for two years on joint Schedule C business tax returns. The Tax Court found that most of the legal fees were to defend the husband against personal conduct issues. The court denied the deduction for personal legal expenses but allowed a deduction for $13,000 for business-related legal expenses. (TC Memo 2023-42)
Proceed with caution
The deductibility of some expenses is clear. But for other expenses, it can get more complicated. Generally, if an expense seems like it’s not normal in your industry — or if it could be considered fun, personal or extravagant in nature — you should proceed with caution. And keep careful records to substantiate the expenses you’re deducting. Consult with us for guidance.