Article Date:
December 2017

Word Count:



Entertainment Tax Deductions Look Fishy



Editor’s Update: Directly-related entertainment is deductible prior to January 1, 2018. See Tax Reform Wipes Out 50 Percent Business Entertainment Deductions.



John Henry is engaged in an IRS audit, and he has a big problem with his entertainment deductions.


John’s first visit with the IRS was unsatisfactory. He did not have any proof of his entertainment costs. The auditor allowed him to return for a second visit, at which point he would have the opportunity to prove his entertainment expenses.


John returned home and made extensive lists detailing entertainment in the past 12 months: who attended the events, when and where they occurred, and what was discussed. He showed these lists to the IRS auditor, but she did not like them.


She wanted proof of where the cash came from to pay for the entertainment. Since John did not spend any more than $75 on a single entertainment event, he didn’t need receipts because of the $75 rule.1 ... Log in to view full article.

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