Entertainment & Meal Expense Tax Rules

 

The following tax law rules pertain to entertainment and meal expenses.

1-The expense must be directly related to and or associated with the active conduct of the taxpayer's trade or business.

2-Generally, the deductible portion is 50% of the amount deemed not lavish or extravagant. Meal expenses incurred in the course of travel away from home fall in this category. (NOTE: Some limited exceptions to the 50% limit apply and the full 100% is deductible)

3-The total expense also includes any admission fees, parking fees, tips, and taxes paid.

4-Club dues such as airline, country, hotel, luncheon, social, and sporting clubs are NOT deductible in and of themselves.

5-The deductible portion of business gifts is limited to $25 per recipient per year and is treated separately from entertainment and meal expenses.

The taxpayer should keep documentation and substantiation with the following information:

            Date

            Description

            Total Amount

            Business Discussed

            Business Relationship of those entertained

            Identification of individuals who attended the event, their reason for attending, their titles, etc.

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net