Football is Back!

Football is Back – Can my business deduct the expense of Season tickets?

In cities across America, fans thronged to stadiums to support their favorite teams.  Perhaps a few of you business owners out there use this as an opportunity to entertain clients and prospects and to further your business growth and potential.  Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers.   If you buy season tickets for business use, you must treat each ticket in the season as a separate item. To determine the cost of individual tickets, divide the total cost (but not more than face value) by the number of games or performances in the season. You must keep records to show whether you use each ticket as a gift or entertainment. Also, you must be able to prove the cost of nonluxury box seat tickets if you rent a skybox or other private luxury box for more than one event.   For your luxury box rentals, if expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. The amounts separately stated for food and beverages must be reasonable. You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals.

With all entertainment related expenses, the general rules must be remembered to justify the expense and documented accordingly:

1      1.     Amount:  Cost of each separate expense. Incidental expenses such as taxis, telephones, etc., may be totaled on a daily basis.

        2.     Time: Date of entertainment.

3      3.     Place or Description:  Name and address or location of place of entertainment. Type of entertainment if not otherwise apparent.

4      4.  Business Purpose:  Business purpose for the expense or the business benefit gained or expected to be gained.  For entertainment, the nature of the business discussion or activity. If the entertainment was directly before or after a business discussion: the date, place, nature, and duration of the business discussion, and the identities of the persons who took part in both the business discussion and the entertainment activity. 

       5.  Business Relationship:  Occupations or other information (such as names, titles, or other designations) about the recipients that shows their business relationship to you.  For entertainment, you must also prove that you or your employee was present if the entertainment was a business meal.

Enjoy football season and if your Panthers fan, it’s not time to panic yet…15 more games to go before a hopeful playoff birth!

brad@mcarthurco.com

704.544.8429