Holly took a prospective client to dinner, and after agreeing to a business deal, they went to the theater. Holly paid $290 for the meal andseparately paid $250 for the theater tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?
A)$540
B)$270
C)$145
D)$125
E)None-the meals and entertainment are not deductible except during travel.

Question

Quizplus · Accepted Answer

Under the current tax law, only 50% of meal expenses can be deducted as a business expense, so Holly can deduct $145 (50% of $290). Entertainment expenses, such as theater tickets, are not deductible.

Holly Took a Prospective Client to Dinner, and After Agreeing