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Nolan Accounting Center
4262 South 108th Street
Greenfield, WI 53228
Phone: 414-425-5690
Fax: 414-425-2373
Website: www.nolanaccounting.com
November 2022
November 2022 Client Profile
Ann’s planning to host a company holiday party for her employees and select clients.How much of the costs can she deduct as a business expense?
Holiday parties for employees’ benefit are generally 100% tax deductible. Costs to entertain guests other than employees must be directly related to the active conduct of business to claim the same tax benefits.
If inviting clients is an act of goodwill and Ann has no intent to talk about business with them, the expenses for clients will likely be 50% deductible.
Ann will need to allocate her party expenses between employees and clients. Unless there are specifically identifiable expenses for clients – like providing them with goodie bags or gift cards as a token of appreciation, she can do a quick allocation. For example, if there are 100 guests and 60 of them are employees and their spouses, 60% of the costs will be 100% deductible, and she can deduct half of the remaining 40%.
Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.
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