what do I need to do to host a client seminar event plus a reception with food and beverages in order to deduct it as 100% business expense
State/Country relating to question: Minnesota
just wondering what the tax regulations are in deducting this business expense
If meals or entertainment are provided for the benefit of your employees, you can write off 100% of the cost as a business expense. This is an exception to the usual 50% write-off rule.Common examples of expenses that can be written off at 100% include:Meal and entertainment expenses for a company picnic or holiday party.Free coffee, bottled water, donuts, etc. provided to employees at the place of business.Free food or beverages provided to the public for promotional purposes.Meals provided at the place of business to more than half of the employees as an enticement for working after-hours, weekends, or holidays.Cost of meals included on employee W-2 forms as taxable compensation.Perhaps this event is an employee event and clients just happened to be there?
So, I can write-off 50% - treated as an entertainment expense. What if a meal is served at the same time as the presentation?
Also, what are the requirements to be allowed as an entertainment expense? do you have to include business - or can it be purely social as an attempt to bring on new clients?
The meal is still subject to the 50% rule. Another thought - You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.Entertainment Expense: You must have records to prove the business purpose (under the applicable test) and the amount of each expense, the date and place of the entertainment, and the business relationship of the persons entertained. For further information on record keeping, refer to Topic 305. If you can substantiate that it's a business purpose and not just going out with your friends, you should be okay The key is to keep very adequate records. Topic 305: http://www.irs.gov/taxtopics/tc305.html
How does that compare to a sports event where tickets are provided? Do i need proof that we "discussed" business - or would the fact that they are clients with new prospects be acceptable?
They are clients with new prospects should be acceptable. I don't think it really compares to the sports event, but if you sold tickets to the event you could argue a greater deduction. It's probably not worth the extra effort though.With Meals & Entertainment, it's one of those things that the IRS really watches because it can be abused a lot. Keep good records and you should be fine.
One last clarification - if i can prove that they are current clients and I'm holding an event to for them to introduce me to new prospects - the food/beverage portion would be 50% deductible - and do you think the purpose being "to bring on new clients" is enough, or should I incorporate some type of "business presentation"?
I would always do a little bit of business presentation
Graduate Accounting Degree from Ole Miss