Your personal entertainment costs—eating out, going to the movies or a ball game—are not deductible. But there's no law saying you can't combine business with pleasure—and make Uncle Sam foot the bill. It's common business practice to wine and dine customers, clients, and other business associates in the hopes of getting new business or keeping existing business. If you meet certain conditions, you can treat these expenses as deductible even though they may have provided some element of personal pleasure or recreation. But in view of the potential for abusing the write-off option, the IRS looks very closely at entertainment deductions. So be fully prepared to support any of your claims with the necessary proof to back up the positions you take on your tax return.
This chapter explains the types of entertainment costs you can deduct and the recordkeeping required to back up your write-offs. For more information, see IRS Publication 463, Travel, Entertainment, Gifts, and Car Expenses.
Meals and Entertainment
Wining and dining is a common business practice in just about every line of work. The government recognizes that this is standard operating procedure, but it doesn't want to underwrite the cost of a 3-martini lunch. So the cost of business meals and entertainment may be only partially deductible.
In general, your meal costs are nondeductible ...