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Dining deductions: That's entertainment!

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in Small Business Tax

Q. In a recent issue, you said people can deduct the costs of inviting clients to a dinner party at their home without discussing any business during the night. Our CPA says that business must be discussed for this to be deductible. Did we miss something? E.D., Pensacola, Fla.

A. Yes. At the beginning of the article, we noted that you can deduct 50 percent of entertainment costs if the entertainment precedes or follows a substantial business discussion. For out-of-towners, that can mean the day before or after a business meeting. So, you can throw a Friday-night party for out-of-town business guests and still deduct the costs if you hosted your business meeting on Thursday or Saturday. Tip: Count yourself and your spouse as “business guests.”

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