Entertainment Expense

What is an entertainment expense?

Entertainment expenses are costs for activities generally considered amusement, recreation, or entertainment. Under current tax law, entertainment expenses are not deductible regardless of business purpose. This includes sporting events, concerts, golf outings, and similar activities. The 2017 tax law eliminated the entertainment deduction that previously allowed 50% deductibility.

Entertainment vs business meals

Business meals remain 50% deductible when directly related to business. If you take a client to a sporting event and buy food at the stadium, the tickets are non-deductible entertainment, but the food might qualify as a deductible meal if business is discussed. Billing practices should separate these categories. Combining them risks losing the meal deduction.

Tracking entertainment for other purposes

Even without a tax deduction, you may want to track entertainment spending for budgeting, client relationship analysis, and reimbursement purposes. Code entertainment to a non-deductible expense account. This keeps your books accurate for tax purposes while maintaining visibility into what you spend on client development activities.