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IRS SUBSIDIZE YOUR ENTERTAINMENT
Wouldn’t
it be ideal to entertain and have the IRS subsidize your FUN?
With proper recordkeeping and a business purpose, sporting
events and dinner parties can be fully or partially deductible.
Wining
and Dining-A 50% deduction is allowed for meals and
entertainment that have a business purpose. Receipts are required
for amounts over $75.
A business
purpose includes entertaining potential clients and customers.
Although not all entertainment is conducive to discussing
business, you may be able to discuss business before or after
when undisturbed time will be available. The rule of thumb
is that the business discussion should occur within a 24 hour
period.
Keeping
adequate records in a “timely manner” is extremely
important. Documentation should include who, what, when, and
where. In addition, the specific purpose of the wining and
dining along with details on what was discussed are necessary.
Recording this information in a timely manner on ledger pads
or in a planner is advised to secure the deduction.
Home Entertaining-This is one area where
expenses are overlooked. The same documentation rules apply.
Although it may difficult to discuss business at a large party
with each individual guest, perhaps the invitation could identify
the business purpose of the event or a display in the home
could illustrate the business purpose. It is a good idea to
take pictures and save the invitation.
Special Situations Allowing 100% Deduction-The
entire cost of an event to entertain employees is fully deductible.
Remember, it is for all employees, not just a select few.
For larger companies, the event can be held for a certain
division, group, or department rather than all employees.
The entire
cost of a sales promotion event is also deductible if the
food and beverages are provided during the presentation, not
before or after.
So, let IRS subsidize your entertaining. But remember that
these entertaining deductions must be reasonable following
the rule that “pigs get fat, hogs get slaughtered”.
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