Entertainment Expense Deduction

Entertainment Expense Deduction

A reduction in one's income for purposes of calculating one's income tax. The entertainment expense deduction is equal to up to 50% of what a business spends in the course of buying meals for or otherwise entertaining a client, customer, or employee. In order to be eligible for the deduction, one must be able to prove that one conducted business with the person being entertained.
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The tab (well under a billion dollars) could be paid by ending free postage for incumbents' self-promotional mailings ($100 million); eliminating the tax deduction for lobbying expenses (another $100 million); and reducing the 80 percent entertainment expense deduction, well-used by lobbyists, to 75 percent ($600 million more).
162(m) limits on deductions for executive compensation, cases involving voluntary employees' benefit association (VEBA) and deferred compensation deductions, IRS guidance relating to travel and entertainment expense deductions, developments under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) regulations and the new "Nanny" tax provisions.

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