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- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Need Some Deductions for 2011?
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Updated for 2011
Travel Expenses
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Entertainment Expenses of Non-Employees
Although travel costs of a non-employee spouse, dependent, or other person may not be deducted, you may deduct the cost of such person's participation in the entertainment of business clients at conventions or business trips under certain conditions.
- Directly related dining or entertainment (business discussion during dining or entertainment):
- If a spouse or other person participates in the dining or entertainment that qualifies as directly related entertainment under the generally related test you may deduct entertainment-related costs for your spouse or other person(s).
- Under the generally related test you must be able to show:
- A business motive for the dining or entertainment.
- You had more than a general expectation of getting future income or other specific business benefit (other than goodwill).
- A business meeting, negotiation, or discussion took place during the period dining or entertainment.
- If audited, the IRS will want evidence that a business meeting, negotiation, or discussion took place during the period of dining or entertainment.
- If no discussion took place, you must prove that you would have discussed business had it not been for circumstances beyond your control.
- Under the generally related test you must be able to show:
- If a spouse or other person participates in the dining or entertainment that qualifies as directly related entertainment under the generally related test you may deduct entertainment-related costs for your spouse or other person(s).
- Goodwill entertaining (business discussion before or after dining or entertainment instead of during entertainment):
- This is where there is a substantial and bona fide business discussion directly before or after the dining or entertainment (not during dining or entertainment like in the directly related test mentioned above).
- An officially scheduled meeting at a convention is generally considered a bona fide business discussion.
- Generally, you may deduct the cost of goodwill entertaining of:
- Business associates and their spouses, and
- Yourself and your non-employee spouse or other person(s) participating in the dining or entertainment.
- Bear in mind, food, beverages (including tax and tips), and the cost of the entertainment are only 50% deductible.
- In addition, only 50% of the face value of a ticket to an event is deductible regardless of what you may have actually paid (for example, to a scalper).
- Transportation to and from the dining or entertainment facility are 100% deductible.
- This is where there is a substantial and bona fide business discussion directly before or after the dining or entertainment (not during dining or entertainment like in the directly related test mentioned above).
Next:
Travel Expenses: Entertainment Expenses of Non-Employees-Example.
Related Links
- Domestic Per Diem Rates
- What Are Travel Expenses?
- Who May Deduct Travel Expenses?
- Items Included in Travel Expenses
- Tax Terms You Need to Know-Ordinary and Necessary Expenses
- Tax Terms You Need to Know-Tax Home Defined
- Tax Terms You Need to Know-Tax Home Example
- Tax Terms You Need to Know-Transient and Away From Home Test
- Personal Expenses
- Expenses of a Spouse, Dependent, or Other Individual
- Employee Travel Expenses
- Employer Error Reporting Travel Expense Reimbursement on Form W-2
- Employee Accountable Plan
- Commuting Costs
- When You May Deduct Commuting Costs
- Temporary Work Locations and Commuting Expenses
- Temporary Work Location-Example
- What if Your Expectations for the Length of Time to Work Changes?
- Professionals Traveling to Clients' Sites
- Business Conventions and Seminars
- Investment Conventions
- Video Tapes Received at a Business Discussion
- IRS Meal Allowance
- If Employer is a Relative
- Daily Meal Allowance Amount
- Travel Expense Records You Must Keep
- Transportation Industry Workers
- Claiming the IRS Meal Allowance
- Travel By Cruise Ship
- Business-Vacation Trips Inside the U.S.
- Business-Vacation Trips Outside the U.S.
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