Tracy, the regional sales director for a manufacturer of exercise equipment, pays $2,500 to rent a skybox for a visiting performance of the Harlem Globetrotters. The skybox holds 10 seats, and Tracy invites 7 clients to the event. Nonluxury seats range in price from $80 to $120. The refreshments provided during the event cost $600. If Tracy meets all of the requirements for deductibility (i.e., business discussion, substantiation), she may deduct:

Question

Quizplus · Accepted Answer

Tracy can deduct 50% of the cost of the refreshments, which is $600, so $300 is deductible. The cost of the skybox is not deductible as entertainment expenses are generally not deductible. Therefore, the total deductible amount is $300.

Tracy, the Regional Sales Director for a Manufacturer of Exercise