In general, entertainment, amusement, and recreation expenses are not deductible as business expenses on Schedule C.
This rule applies to expenses related to activities such as:
- Sporting events
- Concerts and shows
- Golf outings
- Club memberships for entertainment purposes
- Hunting, fishing, or similar recreational trips
- Other entertainment activities provided to clients, customers, or business associates
Can I Still Deduct Business Meals?
While entertainment expenses are generally nondeductible, you may still be able to deduct 50% of the cost of qualifying business meals.
To qualify, the meal must meet IRS requirements, including:
- The expense must be ordinary and necessary for your business.
- You (or an employee) must be present when the meal is provided.
- The meal cannot be lavish or extravagant under the circumstances.
- The meal must be associated with a business purpose or business discussion.
- Meeting with a client over lunch to discuss business
- Meals while traveling for business
- Meals with business partners, vendors, or prospective customers when business is being conducted
Entertainment and Meals Purchased Together
If food and beverages are purchased separately from entertainment, or if the cost of the meal is separately stated on an invoice, the meal portion may still qualify for the business meal deduction.
For example, if you attend a sporting event with a client and separately purchase a meal, the ticket cost would generally not be deductible, but a qualifying portion of the meal expense may be.
Additional Information
For more information on the Tax Cuts and Jobs Act, click here.