Tax Tip

 

Deduct the Cost of Entertaining Spouses...

You can claim a business deduction for the cost of entertaining your own spouse and the spouses of business associates--even if the spouses aren't involved in your business.

Use the "associated entertainment" rule. This allows you to deduct entertainment that is associated with your trade or business, and which directly proceeds or follows a substantial, bona fide business discussion.

Example: The night before business meeting, several out-of-town customers and their spouses come to town. You and your spouse entertain them and their spouses. The next day, you have a business meeting with the customers. The previous night entertainment is deductible.

Anyone with whom you can reasonably expect to have a business dealings can qualify as a business associate--including customers, clients, suppliers, employees, partners, agents, and advisers.

Limit: Only 50% of the total cost of meals and entertainment is deductible.

Keep accurate records and you will pay less out in taxes each year. By increasing your deductions on several things you will notice this at tax time.

This tip is a starting point for limiting your taxes. All the information is not included here due to space limitations. Always consult a professional before using a tax tip. These tips should be used to ask your CPA or investment advisor about.

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Last modified: April 15, 2003