Don't overlook these!
Updated for 2012
Growing a business sometimes requires that you wine and dine business associates.
Generally, to justify claiming dining and entertainment expenses the IRS wants you to show that a business discussion or negotiation occurred to obtain income or some business benefit.
For example, you may entertain prospective customers in an effort to get new business. You may provide goodwill entertaining to encourage existing customers to continue doing business with you.
As a general rule, a business discussion must take place the same day as the dining or entertainment. If this is not the case, and if you're questioned, you will need an explanation that is acceptable the an IRS.
The IRS recognizes that if you have an out-of-town customer, it is possible for the business discussion and the dining or entertainment to be separated by one day.
You may only deduct 50% of meals and entertainment costs.
To be deductible, meal and entertainment expenses must be:
Ordinary and necessary:
An ordinary expense is an expense that is common and accepted in your type of business. A necessary expense is an expense that is helpful and appropriate in your business. To be considered a necessary expense, it does not have to be required.
Meals and Entertainment Expenses: Two Restrictive Tests for Meals and entertainment Expenses
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