Clear Business Setting Test

外汇网2021-06-19 14:32:12 81

A test for deductibility of business-related dining and entertainmentexpenses. The clear business setting test mandates that there can be no other motive for incurring these expenses except to further the taxpayer's business. For example, paying dining and entertainment expenses for an associate with whom the taxpayer has no social or personal connection will usually qualify as a deductible business expense.

Qualifying expenses can include meals and entertainment related to generating publicity, price rebates for regular hotel or restaurant customers, and the cost of renting a display room at a convention. Usually, however, the taxpayer must be psent at the function and there cannot be substantial distractions, such as at a nightclub or sporting event. If the associates psent are a mixture of business and personal associates, then the costs incurred are also generally nondeductible.

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