Article Date:
March 2022

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Entertainment Facility: Perk for You, Your Net Worth, and Your Employees

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.


Now say, 10 years later, without any tax consequences 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 you achieve the same result if you operate your business as a corporation?


Yes. You would simply have the corporation rent the facility from you or reimburse you for the facility costs, including mortgage interest and depreciation. Remember, you want the title in your name, not the corporation’s name.


Basic Rule


To make this work, 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 with 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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