Who doesn’t love eating a meal out with coworkers or going to a concert to tap your toes to some funky music? We all do. But enjoying entertainment can be pricey, especially if a large group is involved.
The good news is that Uncle Sam and the IRS allow small business owners to deduct 50% of meals and entertainment events in which they partake. But some type of business must be conducted before, during, or after these events in order to qualify for this popular – yet often improperly claimed – tax write-off. In addition, you must save all relevant receipts for these events and document who was involved and what business was discussed.
The following types of entertainment events are considered deductible expenses by the IRS:
Enjoying a meal at a restaurant
Imagine a juicy filet mignon at your local steakhouse. Think about the tasty pasta you could get from a nearby Italian eatery – or the succulent shrimp at your favorite seafood place. (Are you hungry yet?) Meals, which are considered a form of entertainment and socialization in most cases, qualify as a business entertainment expense. Therefore, half the price of your bill that includes food and beverages can be deducted when you bring business associates or clients to a restaurant and pick up the tab.
Attending a sporting event
The New York Yankees, Dallas Cowboys, and Indiana Pacers are just a few of the popular American sports teams out there. If you bring a business partner to a ballgame, you can deduct the tickets and other items you may get at the game. Whether you buy 10 outfield seats at a baseball game or 3 front-row seats at a hockey game, half of the cost of these tickets can be claimed as a write-off on your return.
Attending a concert
Are you a Jimmy Buffet fan? Do you think your customers would prefer Bruce Springsteen, Tom Petty & The Heartbreakers, or John Mayer a little better? Whatever genre you, your employees, or your clients enjoy, you can all check out a local concert and write it off as a business entertainment expense. This may include the cost of the concert tickets, food, drinks, and other items you pay for to entertain your small or large group.
Taking clients on your private yacht
Perhaps you live on the water and own a private yacht with full accommodations onboard. Let’s say you take a group of your clients out on the boat for an afternoon of fun on the water. During the scenic voyage, you provide beverages and snacks to those in attendance. You can write off half of this trip as an entertainment expense.
Going to a nightclub
Taking a business prospect or current client to a nightclub for some food, drinks, and entertainment can be written off as a business tax deduction. As with the other types of events, the 50% deduction limit would apply to this type of outing as well.
Don’t forget the gift deduction
Remember that if you give baseball or concert tickets to a business associate or client as a gift, you can only claim a deduction of up to $25 per person per year. This means it’s often more beneficial to use the 50% business entertainment deduction, but you’d likely have to be present at the event to use it.
To ensure you’re properly claiming business tax deductions like writing off business entertainment events, consider teaming up with the accounting professionals at 1-800Accountant. Call 1-800-222-6868 or go to the “Services” page on www.1-800Accountant.