Entertainment Expense Deductions

Tax and Financial News

July 1999

Entertainment Expense Deductions

Understanding the definition of a qualified business expense is the key to getting Uncle Sam to help you pay part of the bill. The current tax law states that 50 percent of the amount you spend to entertain your clients, customers or an employee is deductible. This amount would include tips and taxes. You can go to the theater, a nightclub, a ball game, play golf or visit your country club for a round of tennis. For an entertainment expense to qualify for a tax deduction, it has to be:

1) Associated with business. The entertainment
must take place directly before or after
a business discussion.

2) Ordinary and necessary to your business.

3) Directly related to the business, which
means the business must actually be
discussed during the entertainment.

Remember that deductions are limited to the face value of a ticket. Ticket brokers and scalpers won't count, so get your tickets early to qualify for current entertainment deductions.

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