Article Date:
January 2019

Word Count:



Entertainment Facilities after the TCJA Tax Reform

Imagine this: your Schedule C business buys a home at the beach, uses it solely as an entertainment facility for business, pays off the mortgage, and deducts all the expenses.


Next, say, 10 years later, without any tax consequence to you, you start using the beach home as your own.


Is this possible? Yes. Are there some rules on this? Yes. Are the rules difficult? No.


Okay, so could I achieve the same result if I operate my business as a corporation? Yes, but the corporation needs to reimburse you for the facility costs, including mortgage interest and depreciation, because you want the title to always be in your name, not the corporation’s name.


Basic Rule


The beach home, ski cabin, or other entertainment facility must be primarily for the benefit of employees other than those who are officers, shareholders, or other owners who own a 10 percent or greater interest in the business, or other highly compensated employees.1 In this situation, you create



100 percent entertainment facility tax deductions for the employer (you, or, if incorporated, your corporation), and


tax-free use by the employees. ... Log in to view full article.

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