Is a share-holder of company A who is paid for business travel costs by company A but does not receive any wages from company A and spends all their working hours for company B which has no relationship with company A, taxed as an "employee" (W-2) or "non-employee" (1099) of company A for receiving the reimbursement for travel costs that he/she pockets zero dollars?

  • 2
    Why is A paying business travel costs for this individual? Presumably, the business is realizing some sort of benefit (i.e. this individual is doing some work for A in the meetings he is travelling for). Jul 25 at 16:21
  • What business travel costs if the person doesn't do any work?
    – littleadv
    Jul 25 at 16:34
  • @littleadv Perhaps A pays for all of their shareholders to travel and attend the AGM?
    – Showsni
    Jul 26 at 12:02
  • @Showsni what's AGM? Why would a company pay their shareholders' expenses? That would be more like a dividend, although may have some legal issues if the reimbursements are different for shareholders with the same shares
    – littleadv
    Jul 26 at 14:46
  • @littleadv The AGM is the Annual General Meeting, where the shareholders meet to elect company officials, vote on company business, etc. You can imagine that possibly A has strict quorum requirements that require it to ensure as many shareholders attend as possible.
    – Showsni
    Jul 26 at 17:19

1 Answer 1


A very similar question was asked before, and I replied to that. There is a huge difference here: A shareholders cost of travelling to a shareholder meeting is their private business. They may be able to deduct it from the taxes they pay on their gains as a shareholder, but the company absolutely cannot book this as an expense.

If the company pays this travel cost, they may have to justify this to other shareholders (they can’t just hand over money to one shareholder and not give anything to the others), and the payment should be booked not as an expense reducing the company’s taxes, but as a dividend payment which is not an expense and not tax deductible, but the share holder would be responsible for paying the right amount of taxes on the dividend.

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