Newsmax Finance reported on a little-known item in the new tax law that will do away with special interest tax breaks and loopholes, among them the elimination of a company’s ability to write off entertainment as part of its business expenses.
The article points out that many businesses purchase box seats at sporting events, concerts and other events as tokens of thanks for existing clients or as a way to attract prospective ones. Before the tax law went into effect, companies were able to deduct 50% of the expenses as business expenses. This benefited not only the companies but the venues where these events were held. This past U.S. Open tennis tournament in Forest Hills, New York saw 40% of its ticket sales come from corporations, according to the article.
However, there are some exceptions. As MarketWatch points out, meals for a client can still be written off at 50% and companies can still take clients to sporting events or concerts only if it relates to the business at hand. But if the company takes a client to a restaurant where they provide live music, that may fall under an entertainment expense and, therefore, will not be deductible.
In an effort to circumvent this, many businesses are attending promotional events to advertise their brand, which can be written off as a marketing expense. But as the MarketWatch article points out, it is not enough for the company to hang its banner at a conference center and talk to visitors for a few minutes in order to qualify as a marketing expense. A business must make its pitch throughout the event.
If you are starting a new business, or if you already own a business and would like to stay current on the latest business tax laws, the advice and counsel of an experienced business law attorney is often vital. Contact the experienced attorneys at Blodnick, Fazio & Associates, P.C. for a free consultation by calling (516) 280-7105.