Using Entertainment Facilities to Entertain Clients

Entertainment facilities are not considered business assets. You may not deduct the operating expenses of maintaining facilities used to entertain clients and customers.

Examples of entertainment facilities include:

  • Airplanes
  • Apartments
  • Automobiles
  • Fishing camps
  • Hotel suites
  • Hunting lodges
  • Swimming pools
  • Tennis courts
  • Homes in a vacation area.

A season box seat or pass at a sporting event or theater is not considered an entertainment facility.

Operating expenses are disallowed and include items such as:

  • Rent
  • Utilities
  • Security, and
  • Depreciation.

The following are deductible without having to show a business purpose:

  • Interest
  • Taxes, and
  • Casualty losses

The cost of food and drinks at an entertainment facility are deductible if they meet either the directly related or associated test.

File your personal and small business taxes (Schedule C)