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Deducting Entertainment Expenses

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February 10, 2015
Author: NCH

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If you pick up the tab for entertaining present or prospective customers, you may deduct 50% of the cost if it is directly related to the business. To be deductible, the main reason for the entertainment expense would be the active conduct of business. You must be attempting to make a sale or otherwise be conducting business with the specific expectation of getting some business benefit out of the deal. Be very careful about writing off dues to certain clubs or entertainment facilities, these are not deductible business entertainment expenses. An exception to the 50% rule is if you are inviting the general public to an event you put on to promote your business. In this case, it would be considered advertising expense and as such would be 100% deductible. Expenses less than $75 don’t require receipts, with that said; it’s easier to just keep the receipt.


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