Masonry Magazine December 1989 Page. 46
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46 MASONRY-NOVEMBER/DECEMBER, 1989
TAX MATTERS
continued from page 45
# Super Bowl Party Tackled By IRS
Here's a scenario that applies to almost everyone in the
business world: You take your best customer and his spouse
to a local sporting event... a good entertainment deduc-
tion, right? Wrong. It's incredible how many business peo-
ple lose deductions that they would have sworn were good.
Let's take a look at a real-life case.
The Court of Claims threw the taxpayer (Danville Co.)
for a big loss-$103,000 spent on a four-day Super Bowl
Sales Seminar. Out of 120 attendees, 106 were business
related: customers of Danville and their spouses; employ-
ees or shareholders of Danville. Another 14 attendees were
not business related: spouses of employees, various chil-
dren and friends of Danville's president.
The court was influenced by various factors, as follows:
1. The invitation letter and other promotional mate-
rial contained no reference to business meetings,
discussions, sales seminars, round table discus-
sions, or any other activity remotely related to fur-
thering Danville's business.
2. The sole focus of the invitational material was the
Super Bowl Weekend and the additional program
frills, including a visit to the French Quarter.
3. The agenda provided to the Danville employees did
not reflect a planned schedule of the type that would
be disseminated in preparations for a bona fide
business meeting.
4. No agenda was given to the other attendees.
5. Danville did not demonstrate that any formal busi-
ness meetings or even substantial business discus-
sions with customers occurred.
6. No reasonable basis could be shown for deducting
any of the costs incurred relative to spouses, chil-
dren and friends of Danville's president.
The court(Danville Plywood Corp. vs. U.S., 3/31/89, 89-
1 USTC 9248) blocked the entire $103,000 spent. The real
question is, could all or any of the amount spent have been
deducted? The answer is a loud "YES." If Danville had
held a bona fide business seminar before or after the var-
ious entertainment activities, the deduction (allocated to
the 106 business related attendees) would have been good.
The emphasis of the entire weekend must in fact be on the
business aspect of the trip. The business activities should
be documented with agendas, a tape of the business activ-
ities, and notes of the business sessions.
Here are the simple rules to follow to make every en-
tertainment expenditure deductible.
1. Before or after the entertainment activity, have a
bona fide business discussion:
2. Document the business portion; and
3. Avoid mixing non-business guests with business-
related people.
Remember, only 80% of allowable entertainment ex-
pense is deductible.
Want to learn how to maximize your entertainment and
travel deductions. Send for the companion Special Re-
ports. The Complete Guide to Building Your ENTERTAIN-
MENT Deductions... Legally ($19) and The Complete Guide
to Building Your TRAVEL Deductions Legally ($19).
Get both reports for $32. Send to Blackman Kallick Bartel-
stein, 300 South Riverside Plaza, Chicago, Illinois 60606.