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Article Date:
December 2008


Word Count:
1662

 

 

Do You Have What It Takes to Deduct Your Holiday Parties


This article gives you the knowledge you need to deduct your holiday party. The deduction depends on two factors: First, whom did you invite to the party? Second, what did you do at this party?

 

The “whom” and “what” are intertwined, so that’s the way we will discuss them in this article.

 

Employees

 

The cost of a holiday party for your employees is automatically deductible.1 No business meeting need occur. No business activity need occur.

 

Further, this party is not subject to the 50 percent cut that applies to entertainment expenses. Thus, make sure that your chart of accounts or other tax records contain a classification for entertainment that’s 100 percent deductible.

 

Spouses of Employees

 

You may allow your employees to bring their spouses to the holiday party. You deduct the cost of entertaining the spouses just as you deduct the cost of entertaining the employees.2 Thus, a holiday party for employees and their spouses is 100 percent deductible.

 

Documentation of the Employee Party

 

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