Monday, March 9, 2015

Social meals aren't business deductions



Social Meals Aren't Business Deductions

There’s an active rumor mill out there, and you should be skeptical of anything you hear about deductible expenses, especially if they sound too good to be true.  I heard about a tax preparer who deducted gym memberships and even plastic surgery procedures as professional expenses.  Feces of gentleman cow.  And a while back, I was horrified to learn about a persistent rumor, mostly among younger actors, that whenever you have dinner with your actor friends and talk about the business, it's a deductible business expense. More bull pucky – and it could be dangerous bull pucky if you get audited.  

To be a legitimate deductible entertainment expense, the person you're taking to dinner (or coffee, or whatever) must have the power to hire you or to provide some other clear business advantage to you at the time of your meal, and you must discuss a specific income-producing opportunity, not just your career in general. 

For example:  you take your agent to lunch and talk about signing an exclusive contract and how they might then promote you more actively.  That’s a clear, current business relationship and the conversation is about a specific business activity that is of potential advantage to you, and the meal would be deductible.    

On the other hand, let’s say you have dinner with an actor friend and talk about a certain play you both like. Even if he or she eventually directs that show and casts you in it, the meal in question is essentially social in nature and isn't deductible. 

There's a detailed discussion of travel, entertainment, and vehicle expenses in Chapter 9 of my Actor's Tax Guide, available at www.ActorsTaxGuide.com

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