Business Deductions

Hot Topics

Need Some Deductions for 2011?

Don't overlook these!

10 Oddball Tax Deductions

11 Most Overlooked Tax Deductions

Updated for 2011

Small Business Deductions: Meals and Entertainment

<< Previous

Audit Proofing Your Meal and Entertainment Expenses

Make sure you document the following 6 items to support your meal and entertainment expenses:

Date
Amount (including taxes and tip)
Place
Business purpose
Name of business associate(s)
Relationship of individual(s)
- customer, client, potential customer, employee.

A good habit to get into is making notes on the back of receipts, in a business diary, or calendar.

Example:

You note might say: "01/5/2012, lunch with Jack Jones, customer; Figaro's restaurant; $75; discussed new line of widgets."

Entertaining at Home

You may deduct the cost of entertaining customers or clients at your home provided a business discussion occurs before, during, or after the meal. Make sure you document the purpose of the entertainment and have all guests sign a guest register.

Keep a record showing:

Date of entertainment
Business purpose of entertainment
Entertainment costs
Set up a guest register that includes the following columns:
- Name of guest (have them sign their name)
- Business Affiliation (e.g., member, V.P. Finance, etc.)
- Referred by

If non-business guests also attend your home entertainment, only deduct costs associated with business guests. Keep a record that shows your total costs for all guests. Then allocate the costs to business and non-business guests.

Boost your credibility if audited: Add a column in the guest register for non-business guests. Then, they can also sign in. Have them enter a checkmark under the Non-business Guest column. If audited, the IRS will see that both business and non- business guests attended but you did not attempt to deduct costs related to non-business guests.

Meals and Entertainment Expenses: Entertainment Costs of a Spouse

Next >>

Business Deductions

More Tax Topics

Quick Links