How to Write Off 100% of Entertainment Expenses

July 3rd, 2014 at 4:59 PM

Most entertainment expenses are 50% deductible. However, the IRS allows you to write off  100% of entertainment expenses, if you are using it to grow your business and you follow the rules.

The IRS uses the term “associated entertainment”, but its really fun. That’s right, such as playing golf or going to a sporting event. If you follow the rules you get to deduct 50% of your fun and 50% of the cost of your client or prospects fun, if you pay for them. Here’s the rules:

• You must bundle your fun activity with a real business discussion before or after the fun.
• This discussion must happen in the same 24 hour day as the fun.
• The discussion must happen in a conducive business environment.

What Substantiation is Required

To prove to the IRS that the meal is deductible, you MUST record the 4 Ws and the H

• Who was the person involved-write down their full name
• What type of entertainment ( golf, movies, etc.)
• Where did the entertainment to place, name of restaurant
• Why –this is the business purpose-be specific such as discuss company financial statements
• How much did the entertainment cost-enter the full amount

A receipt is not required for expenses under $75, but it is recommended that you hold onto them

I recommend to my clients to use a revolutionary system to capture all these details at taxbot.com

This is one of tax strategies to employ to deduct 100% of your entertainment expenses, there are several other ways to accomplish this that I share with my clients.