Paris operates a talent agency as a sole proprietorship, and this year she incurred the following expenses in operating her talent agency. What is the total deductible amount of these expenditures? $1,000 dinnerand theater with a film producer where no business was discussed
$500 lunch with sister Nicky where no business was discussed
$700 business dinner with a client but Paris forgot to keep any records (oops!)
$900 tickets to the opera with a client following a business meeting

Question

Quizplus · Accepted Answer

The IRS requires that business expenses be both ordinary and necessary for the business, and entertainment expenses are generally not deductible unless directly related to the business. Additionally, the IRS requires documentation for business expenses, so without records, the $700 dinner cannot be counted. Therefore, none of the listed expenses are deductible.

Paris Operates a Talent Agency as a Sole Proprietorship, and This