Can you deduct entertainment expenses

For example, your company picnic or holiday party for employees can meet the test. For employees traveling for business purposes, most of their expenses are deductible, including lodging and meals. But you can't deduct entertainment expenses for these employees. An Example: If an employer gives a hotel room or an automobile to an employee who is on vacation, that would be considered as entertainment of the employee, and would not be deductible.

If your business entertains the general public for the purpose of advertising or promotion, this cost is fully deductible as a business expense. For example, if a children's clothing store pays for the expense of hiring a clown at a community event, that might be considered promotion rather than entertainment.

The information contained in this article is not tax or legal advice and is not a substitute for such advice. For current tax or legal advice, please consult with an accountant or an attorney. Accessed Feb. Actively scan device characteristics for identification. Use precise geolocation data. Recreational or social activities for employees e. Business meals e. Entertainment-related meals. Sporting events, concerts, etc.

De minimis items provided to employees at the office e. Meals provided at the convenience of the employer at an on-site eating facility. Goods, services, and facilities made available to the general public e. The biggest one: entertainment expenses are no longer deudctible.

Most work-related meal purchases you can think of are either or 50 percent deductible. But there are a few exceptions. The same applies to a client meal at a restaurant where you invite friends or spouses—the cost of your friends is nondeductible but you can write off half the client bill.

And of course, with the Tax Cuts and Jobs Act, client entertainment is also nondeductible—no more golf games or courtside tickets. We're an online bookkeeping service powered by real humans. Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts. Example 2: Taxpayer X invites Y , a business associate, to a college basketball game and purchases two tickets for them to attend the game in a suite in the college's arena, which includes the cost of all food and beverages.

The cost of the tickets is considered entertainment under Regs. Likewise, since the food and beverages are not purchased separately from the tickets, their cost is also considered entertainment and nondeductible under Sec. Example 3: Assume the same facts as in Example 2, except that the invoice X received separates the cost of the tickets from the cost of the food and beverages. Similarly to Example 2, the cost of the tickets is deemed to be nondeductible entertainment. However, the cost of the food and beverages, at the usual price charged by the college's concession stand if purchased separately, are not deemed to be entertainment expenditures disallowed under Regs.

The regulations do not change the provisions relating to the deductibility of business meals. Rep't No.

However, as before the TCJA, no deduction is allowed for the expense of any food or beverages unless 1 the expense is not lavish or extravagant under the circumstances, and 2 the taxpayer or an employee of the taxpayer is present when the food or beverages are furnished Sec. Any expense for food or beverages made under circumstances that discriminate in favor of highly compensated employees is not considered to be made primarily for the benefit of employees.