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Take Them Out to the Ballgame… but…


You are thinking of taking your client to the baseball game and buying some food while there. If you have a very successful firm, you might even have box seats where food is provided. Under the new tax reform law, what is deductible? Do you know? The answer might surprise you.

Many people are finding out that if they are not self-employed, their tax bite has gone up. Self-employed and business taxpayers can take some deductions that employees don’t get. Businesses can deduct 50% of any food and beverage as long as it is ordinary and necessary for the business, and as long as you are present when the food and beverage was provided. However, entertainment such as ball games, theatrical events or even golfing expenses with clients are no longer deductible. Even more importantly, IRS has recently noted that if you provide both food and entertainment, only the food cost (and beverages) are deductible. They must be separately provided and broken out. If they are not broken out and you end up paying one bill, the whole amount spent could be disallowed.

So what does this mean in our example.

If you go to a ball game with your client and pay for the food, such as the hot dog, separately, you can deduct 50% of the food and beverage cost. However, the ball game entrance fee is NOT deductible.

If you have paid for box seats that include food and beverage, the whole thing isn’t deductible unless there is a break down provided by the event regarding the amount that applies to the food vs the box seats. 

You MUST also talk about some business with your prospect and document in your tax tracker such as Taxbot. You will need to show:

  1. Who was present?
  2. What type of meal was it ( snack, hot dogs and beer, dinner etc.)
  3. Why was the person taken out? Thus, what was the business reason, and what was discussed?
  4. When did this occur ( the date)?
  5. Where did the entertainment occur? (such as Gillette Stadium)
  6. How much did you spend for the food and beverage?

IRS says that you don’t need receipts for costs under $75. However, if you do get a receipt, I would recommend taking a picture of it. 

I guess that hot dog and beer sounds a bit better now that you can write it off.

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