By topic: Entertainment
COVID-19 is going away, perhaps by early summer. It’s time to start thinking business meals and partying with your employees. The chart in this article gives you a helicopter view of the latest business meal and entertainment rules.
Congress wanted to help restaurants due to the COVID-19 pandemic, so they created a special rule that allows you to deduct 100 percent of most of your restaurant business meals for tax years 2021 and 2022. You can take proactive steps now to ensure all your business meals going forward qualify for this 100 percent deduction. Here’s a hint: if you are deducting per diem amounts for your business travel meals, you’ll lose out.
Here’s good news: Partying with and entertaining your employees remains 100 percent deductible after the many tax changes that have taken place during the past three-plus years. Further, your employee parties are not subject to the new restaurant rules.
If you have been looking for some good news on tax-deductible business meals, you will find it in this article. And along with the good news, you will find clarity as to what post-Tax Cuts and Jobs Act rules currently apply to your tax-deductible business meals.
When you know the rules, you can party with your employees and deduct 100 percent of the cost. Interestingly, if you feed your employees during a training program, your deduction is only 50 percent. Make sure you know the rules that give you the 100 percent deduction for employee entertainment.
The Tax Cuts and Jobs Act (TCJA) tax reform crushed a big chunk of business entertainment tax deductions. Fortunately, your business entertainment facility escaped the mayhem and continues as a 100 percent tax-deductible facility. If you want such a business facility, make sure to review the rules in this article.
Here’s a resource guide that gives you the Tax Cuts and Jobs Act tax reform articles published at the Bradford Tax Institute from January 1 through July 31, 2018, including for each article the (a) topic, (b) code section, (c) prior law, (d) new law, and (e) link.
Should you deduct your client and business meals in spite of the Tax Cuts and Jobs Act? This article explains why that is what you should do and gives you reasons for doing it.
We, you, and just about everyone else have been looking for a ray of sunshine that would allow tax deductions for business meals with clients and prospects. In this article, you learn that lawmakers may have intended to grant deductions for business meals with clients and prospects in spite of how they put together the Tax Cuts and Jobs Act.
Tax reform has had a significant impact on the tax deductions you can now claim for business entertainment and meals. The chart in this article shows you how the Tax Cuts and Jobs Act treats 12 meal and/or entertainment events.
You asked us to elaborate on how tax reform did away with client and prospect business meals. It starts with the Tax Reform Act of 1986, when business meals were by law placed in the entertainment category. As you know, so-called business-friendly tax reform killed deductions for business entertainment and, along with it, client and prospect meals.
Imagine this. You pay $1,000 for your golf foursome to play golf in the annual charitable golf outing. You have been doing this for years, and you were always able to deduct the full $1,000. Now, because of the new tax reform, your deduction is $300. Disturbing?
Lawmakers finally did it. First, they reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. Later, in 1993, they reduced that 80 percent to 50 percent. And now, with the newest tax reform, lawmakers simply killed business deductions for directly related and associated entertainment.
Traditional business entertainment such as business meals and ballgames with clients and prospects died with tax reform. That’s a sad deal, really. On the good news front, your parties with employees remain deductible, as do your employee entertainment facilities and selected other types of entertainment.
It’s true—you don’t need a receipt for an entertainment expense that is less than $75. But you may need to prove that you had the cash available to pay for your entertainment that cost less than $75.
The Boston Bruins deducted 100 percent of their meal expenses for employees who traveled out of town for the away games. The IRS challenged that 100 percent and lost. One big deal with the Bruins’ win is that it is precedent-setting, meaning that the Boston Bruins may have created a road map for you that could lead to more 100 percent business meal–expense deductions (versus the usual 50 percent allowance for business meals).
You can deduct NFL tickets under the associated entertainment rules. In this Q&A, our member is traveling from Portland to Atlanta to attend a business conference, and while at that conference, he and his team members will attend the NFL game. The conference creates an easy path to this deduction.
Last month we explained how an S corporation could rent the sole shareholder’s personal residence for 14 days or less, obtain a tax deduction for rent, and create tax-free income for the shareholder. An enrolled agent raises six issues that he thinks could negate this free-rent strategy. Learn what the issues are and why the strategy really does work.
Special documentation rules apply to entertainment and vehicles. One rule requires you to document your vehicle mileage within one week. Another rule says you don’t need receipts if the vehicle or entertainment expenditure is less than $75. This no-receipt rule can be hazardous to your deductions. It also does not relieve you from using the right documentation to prove the expenses.
A precedent-setting court case establishes that one-on-one training can count as a business seminar for tax purposes. Where do you want your one-on-one seminar to take place? Disney World? St. Thomas?
Your business motor home is either a lodging facility, like a hotel, or a transportation vehicle. As a vehicle, it can qualify for Section 179 expensing, but you likely want to avoid that and take the easy road with MACRS depreciation.
The Easiest and Funnest Deduction You’ll Claim This Year: 4 Rules for Writing Off Employee Outings—100%!
The government wants you to have happy employees. That’s why the tax code grants you extra deductions when you provide entertainment and entertainment facilities that primarily benefit rank-and-file employees. In this article, we examine how the rules work when you take your employees on a party trip.
Do you have an upcoming business trip? Wouldn’t it be nice to travel there on a cruise ship and reach your destination fully revitalized? Surprisingly, tax law allows you to treat your cruise vacation as a business transportation expense, which means you can deduct most or all of the cost.
If you reimburse your employees for business expenses, or if you operate your business as an S or a C corporation, it’s crucial that you know and follow the IRS accountable plan rules—this will save money not only for you but also for your employees. We’ll give you two easy-to-use tools that will help you seamlessly incorporate these rules into your business routine.
Through a simple two-step process, you can fully deduct the cost of meals you provide to your employees. That’s right—this strategy helps you avoid the dreaded 50 percent reduction for entertainment expenses. But be careful when you use this strategy—your business may need to classify your meal differently from the meals for non-owner employees.
Lawmakers may not always make your life easy, but at least you know they want you to have fun every now and then. The tax code gives you a 100 percent deduction for the parties that you throw for your employees—as long as you invite the right kind of employees.
If you have ever had a tough day on the golf course, you might not think of golf as “entertainment,” but that’s how the IRS classifies the activity. This is good news for you because it means that in the right circumstances, your golf expenses are deductible. Read this article and discover the unique rules you need to follow to ensure your deduction for golf (and other associated entertainment activities too).
Tax law allows you to have fun at work—in fact, your fun can earn you new deductions. Your can deduct your fun “entertainment” expenses ranging from fishing, hunting, and dancing to fashion shows or whatever you find enjoyable. What’s the catch? You have to mix just the right amount of business into your fun. Fortunately, the law tells you exactly how. This article passes along the information you need to deduct fishing trips and similar activities.
Would you like to deduct business meals with your spouse? What would the IRS think about that? If the IRS said that the meals were not deductible, what would the courts say? You would think there are hundreds of rulings and court cases that explain this. Not so. There is one tax rule that mostly assures the deduction, but it requires an addition. Spend a few minutes learning how tax law treats your spouse when it comes to business meals.
In this article, part 5 of the entertainment facility discussion, you learn how lawmakers take shots at your hunting activities. First, both real and personal property involved in your hunting activities face the entertainment facility disallowance rules. Leasing land for the hunt has its problems too. But if you like to hunt, and if you would like to learn how to deduct your hunting, this article is for you!
The entertainment facility rules are designed to destroy your entertainment facility deductions. But the law contains a number of exceptions. In Part 4 of this series, you learn how to use the business meeting and overnight lodging rules to make your vacation home a tax-deductible business asset.
Learn how today’s restaurant and other receipts printed on thermal paper can create big trouble for your tax deductions. Over time, the images on thermal paper can totally disappear. And of those that have not yet totally disappeared, you have many that you can’t read. This means you need to create a plan that includes scanning or photocopying thermal receipts.
Learn how employee use of your ski cabin or beach home produces a 100 percent business asset with deductions for depreciation, operating expenses, and mortgage interest. This can make for a great fringe benefit for both the employees and you. It also can make for a profitable investment.
You have many ways to make your entertainment facility tax deductible. For example, you can treat use of the facility as compensation to the users. Tax law tags two types of people in your business for purposes of entertainment facility W-2 and 1099 compensation: “specified individuals” and others. For specified individuals whose use of the business beach home, ski lodge, or other entertainment facility creates taxable compensation, tax law limits the business’s deduction for its entertainment facilities. For compensated taxable use by nonspecified individuals, the business faces no special limits on deductions for entertainment facilities.
The IRS just ruled that a same-sex married couple are spouses for federal income tax purposes. This means the same tax deductions and tax benefits that accrue to other married couples now accrue to same-sex married couples. The IRS ruling is a direct result of the Supreme Court’s decision in Windsor. This article sets forth business and personal tax breaks that marriage provides.
How would you like a business tax deduction for your yacht, hunting lodge, hunting lease, airplane, beach cottage, fishing camp, swimming pool, ski lodge, or tennis court? Tax law contains a clear set of rules that you can follow to create such deductions. And as you would expect, the rules are pretty demanding.
You may deduct your costs of business travel. But what happens to your deductions when you travel by cruise ship? Do the rules change? Do the rules vary by business destination? The answer is that the tax-deduction rules change for cruise ship travel and they change by business destination.
Business entertainment is tax deductible even when you pay only for yourself. That’s because entertainment tax deductions are based on the activity, i.e., whether it’s bona fide business entertainment, not on who paid for whom.
As with other forms of business entertainment, taking a prospect, colleague, or client to a sporting event is deductible at the rate of 50 percent of costs. But, as this scenario illustrates, if the sporting event you and a prospect, colleague, or client attend is a certain type of “charitable sporting event,” your costs are 100 percent deductible.
Have you considered buying a personal seat license so that you can buy season tickets to watch your favorite football, basketball, hockey, baseball, soccer, or other team? Would you use the tickets for business purposes? If so, then you need to know if you can claim tax deductions for the cost of the seat license. This article tells you what you need to know.
Lawmakers reduced your deduction for legitimate business entertainment meals from 100 to 80 percent in 1986 and then from 80 to 50 percent in 1993. That might be good news. It could protect you from the dreaded Sutter rule, where you could lose all your entertainment meal deductions if you didn’t spend more, or differently, than you spend on yourself. Yes, tax laws can be strange.
When you attend a convention or similar meeting, your attendance automatically qualifies as you having a substantial and bona fide business discussion. When you precede or follow a substantial and bona fide business discussion with entertainment that takes place in a non-business setting such as going to Disneyland, you qualify to deduct the cost of the Disneyland tickets.
This article answers six questions about the big tax benefits to the sole owner of the S corporation who rents his personal residence to his solely owned S corporation for 14 days or less. The answers deal with (1) the need for a 1099, (2) how to report the 1099 on the 1040, (3) multiple corporations, (4) events for independent contractors, (5) events for employees, and (6) proof of fair rent.
Your business entertainment tax deductions fall into one of two business categories for deduction. The first category requires that the entertainment take place in a business setting. The second category triggers a piggyback entertainment deduction for the non-business setting, such as golf or scuba diving. Once you know the two rules, you have clarity in knowing how to claim your tax deductions for business entertainment.
Are you treating your business entertainment correctly? For example, do you cut your deductions if the entertainment rubs against the lavish or extravagant rule? Are you cutting your entertainment expenses for the 50 percent rule? Learn why it’s easy to misunderstand the lavish or extravagant and 50 percent rules and how that could be hurting your business entertainment tax deductions.
As you likely know, tax law contains a number of rather ugly rules. One such rule is the disallowance of 50 percent of certain meal and entertainment costs. For example, party with your employees and get a 100 percent deduction, but have a serious meeting with your employees in a restaurant and you are stuck with the 50 percent deduction. Interestingly, there is a totally different rule that gives you better tax deductions when you serve the business meal to your employees at a meeting that takes place on your business premises.
If you take a nine-day trip to Jamaica, how many days devoted to business do you need to make the trip tax-deductible? What happens when you spend one of those days doing no business and simply playing on the beach? The critical elements in this article give you a crystal-clear explanation of when and why you can deduct certain days, even those days when you do no work.
Tax law picks on “entertainment facilities” and makes them difficult to deduct. This is where tax planning comes in. With good tax planning, you can create deductions for your entertainment facility.
Do you own an airplane? If not you, how about your corporation? This month, we are writing about the new IRS regulations that govern your use of your C or S corporation’s aircraft. In this article, you will find more than a half dozen strategies that you can use to minimize the tax bite caused by personal use of your corporation’s aircraft.
Tax law contains a strange rule that doubles the business tax deduction for a charitable skeet shoot over the deduction allowed for business entertainment. In fact, the charitable-skeet-shoot rule produces a business tax deduction greater than what you could deduct as a charitable deduction.
Tax law favors and allows deductions for civic and public service clubs and even names some favored clubs. But tax law does not allow dues deductions for airline, hotel, country, golf, athletic, and business-meal clubs.
Does your chart of accounts contain two categories for your business entertainment tax deductions? It should. Your tax deduction for an employee party goes into a different deduction category from your regular business entertainment. Learn about the two accounts and how to get more tax deductions when you party with your employees.
To get a tax deduction for your yacht, use it for business travel and avoid the entertainment facility rules. If you run afoul of the entertainment facility rules, you have one small hope. To maximize your deductions, you want more than 50 percent business use and knowledge of the luxury water transportation tax deduction limits.
You learn valuable business and documentation strategies from IRS audit manuals. We spend time reading these. In this article, we reviewed the IRS audit manual on self-employed lawyers and carved out selected business and documentation strategies you can use to audit-proof your deductible business entertainment.
How do you lose deductions to the IRS in an audit? Worse, how do you compound that loss of deductions by taking your case to court? In this article, see how one proprietor managed to do both.
Doing business in two different locations requires tax knowledge. The purchase of a town house in the second location brings up many tax planning opportunities and a few hazards to avoid.
Poor planning for the S corporation owner’s business expenses can cost the owner every penny of his deductions.
It’s true, you don’t need a receipt for an entertainment expense that costs less than $75. But you may need to prove that you had the cash available for the entertainment.
The business gift basket runs into the $25 limit on business gifts. If you want to deduct more than $25, you need to know the rules in this article that produce bigger deductions.
The no-receipt-under-$75 tax rule applies only to certain travel, entertainment and listed property.
Being in business for yourself produces huge tax-deduction advantages for golfers and golf spectators. Golf advantages are more than double those of football, baseball, and basketball.
Golf before or after convention meetings has been preapproved by the IRS as deductible associated entertainment that follows or precedes a bona fide and substantial business discussion. Golf before or after an office meeting has no such preapproval. It must pass the “associated entertainment” test to qualify for a deduction.
Most entertainment deductions are cut by 50 percent when you complete the tax return. Tax law grants a number of exceptions to the 50 percent cut. One exception eliminates the 50 percent and grants a 100 percent deduction to the party, facility, or entertainment that is primarily for the benefit of employees.
The first thing to get straight with the skiing deduction is that it is deductible as associated entertainment. Thus, you need a bona fide business discussion in a business setting before or after the skiing. If you are staying overnight, remember that lodging for business entertainment purposes is not deductible, but lodging for business education or meetings is deductible.
The law gives you no choice but to keep the proper tax records on a timely basis. This is pretty easy when you know what to do. One easy rule to follow is to never commingle your activities in your bank accounts. Both the rule that requires a mileage log and the rule that requires a time log are more difficult, but absolutely essential to proving your deductions.
Every business meal absorbs your personal consumption, and the IRS allows that consumption as a business expense almost all the time. But the IRS can, whenever it gets the urge, invoke Sutter to destroy your deductions.
You may deduct travel, meals, and lodging in an unsuccessful attempt to hire an employee.
You are talking to yourself (for tax purposes) when you discuss business with your husband over dinner. This is a nondeductible experience.
The sole proprietor may not claim a business deduction for child care that enables him to work. The tax benefit for this type of child care comes on the personal income tax return as a dependent care credit.
Holiday parties trigger a variety of tax rules. Some parties, or parts of parties, are 100 percent deductible. Make sure that your chart of accounts has a place for 100 percent entertainment and a place for 50 percent entertainment deductions.
To deduct a birthday party as a business expense, you must convincingly demonstrate a direct association with business activity.
You may deduct your business golf when you do it right. In fact, golf that qualifies for the special sporting event deduction produces double the tax benefit of regular business golf.
It is easy to deduct business trips within the US. We have a series of criteria and tips to help you plan your next (business) trip.
You need a solid plan when you want to combine deductible education with deductible hunting.
A continuing education group of dentists is going on a fishing trip to Alaska. We help them make the trip deductible by going over the nuts and bolts to make it substantive in scope and content.
Gambling requires good strategies not only in your gambling activity, but also for tax purposes. You need to report your gambling income and losses in your tax returns and keep tax records whether you win or lose, whether the gambling is legal or illegal, and whether the gambling is a tax defined business or hobby.
Under the “objective test,” entertainment does not mean only the entertainment of others. The objective test sanctions Dutch-treat entertainment.
Talking business with your husband does not create a tax deduction for entertainment. For this to work, you need to create a situation where you can use the closely connected rule.
Golf lessons, in this taxpayer’s case, can be deducted as a business expense. The golf lessons improve the business skill he needs in his prospecting.
Tracy Topping saved $251,462 in taxes when she proved that her horse activity was not a hobby, but a promotional tool for her business.
Business meals, like those consumed at Lions Club and Rotary meetings, ARE subject to the 50% rule. We have proof.
You may deduct coffee and sodas in the workplace, as long as you file them correctly.
One couple coaches a girls’ softball team and puts up advertisements for their company. It is a good strategy that is good for business. We show them how to deduct coaching expenses like bats, balls, tees, and a pitching machine.
4% of Americans are audited each year. Do you know what two line-item expenses are most vulnerable to a Schedule C audit? Take our quiz and find out!
Many people, through keen knowledge of the tax law, have been able to use the law to their advantage and buy personal aircraft. Unfortunately, lawmakers changed the rules for deducting personal aircraft. We summarized the new rules for you.
William Lenihan, a well-educated tax lawyer, lost every deduction he claimed on both his Schedule C consulting business and his Schedule E rental businesses because he did not keep good records. Know the law! Keep good records!
Ask yourself two questions: First, would you like to take a cruise? Second, would you like to get a tax deduction for the cost of your cruise? If you answered “yes” to both questions, this article is for you.
Meals served to your employees and independent contractors at training sessions and incentive award trips are subject to the 50 percent cut that applies to entertainment and meals. To qualify for a 100 percent deduction, you need to include the meal as compensation to the employee or independent contractor. That’s what many Fortune 500 companies do.
Hobby gambling can trigger taxes when you have a zero income because the law makes your winnings reportable above-the-line and losses deductible below-the-line.
Nothing explains how to deduct “associated entertainment” better than the deduction of scuba diving. Why? Associated entertainment is strictly fun—no business discussions take place in this non-business entertainment setting. Scuba diving fits this definition perfectly. Tax law allows the deduction for scuba diving as associated entertainment when you connect the scuba diving to either directly related entertainment or a business meeting in a business setting.
Not filing your tax returns on time because you lost or misplaced your tax records is going to make your tax life miserable. The trouble is so bad that you need to consider an “offer in compromise.”
Many sporting events qualify for a 100 percent entertainment deduction rather than the traditional 50 percent. This is true for both participants and spectators. To qualify for the 100 percent entertainment deduction, the net proceeds of the event must go to charity—as they do in a PGA Tour golf tournament.
Golf does not qualify as a deductible expense just because you talk about business on the golf course. Golf does qualify for a deduction as associated entertainment when you have the right business discussion in a valid business setting before or after the golf, generally the same day.
When you start a new business activity or you do a business activity on the side, you must establish a profit motive. One easy way to demonstrate the profit motive is to show the time you spend on the activity. This taxpayer had no proof of time worked, so he looked suspicious to the court.
The physician’s prescription often justifies a tax deduction, but not always. There are tax principles involved that need alignment for the deduction to prevail.
The one-person corporation is a separate legal entity from the owner. This means separate books for the corporation and expense reports from the owner-employee to prove business expenses. When you fail to document your golf or other expenses, two bad things happen.
The law requires the taxpayer to maintain records sufficient to establish his income and deductions. In select circumstances, estimates provide a rational basis for deductions. With respect to vehicle, entertainment, meals, travel, and gifts; estimates are out and neither the court nor the IRS may grant your deductions without the prescribed records.
The discussion on the golf course does not make the golf deductible. What makes the golf deductible is the connection of the golf to the business discussion in a business setting.