Is it a Gift or Entertainment?

Packaged Food

If you give packaged food or drink to a business associate, where the item is intended to be consumed at a later time, it is a gift.

Tickets to the Theater or Sporting Event

If you attend the event along with your business associates the cost of the tickets for yourself and your associates is treated as an entertainment expense. You may only deduct 50% of the face value of the tickets even if you paid more.

If you give business associates tickets to the theater or a sporting event and you do not accompany them you have two options for treating the expense:

  • As a gift, subject to the $25 limitation, or
  • As an entertainment expense subject to the entertainment expense rules:
    • 50% of the cost (face value for tickets) is deductible and
    • a business meeting must have taken place either before or after the event.

Taking Turns Paying the Bill

If you and your business associates take turns picking up the tab for meals and entertainment and no business purpose is served, no one gets a deduction.

File your personal and small business taxes (Schedule C)