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DD 4: Employment-related activities
or “Rules for deducting food and drink expenses related to work”
You could also call this:

“When you can claim full deductions for promoting your business”

You can claim a full deduction for entertainment expenses in certain situations, even if the usual limitations apply. This is possible when the entertainment is mainly used to advertise or promote a business, goods, or services to the public. However, existing business contacts, employees, or anyone associated with the business shouldn’t have a better chance to enjoy the entertainment than the general public.

You can also claim a full deduction for entertainment that’s just a small part of a trade display or public function, as long as the main purpose is to advertise or promote a business, goods, or services.

If you give out free samples to promote or advertise your business to people who aren’t your employees or associates, you can claim the full cost of these samples.

Lastly, if you provide entertainment to someone who is reviewing it for a book, magazine, newspaper, or other media, you can claim the full cost of that entertainment.

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Next up: DD 6: Entertainment as business or for charitable purpose

or “Exceptions for entertainment expenses in business or charity”
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Part D Deductions
Entertainment expenditure

DD 5Promoting businesses, goods, or services

  1. The limitation rule does not apply to a deduction for expenditure on entertainment if—

  2. the entertainment is sponsored mainly to advertise or promote a person’s business, goods, or services to the public; and
    1. none of the following has a greater opportunity to enjoy the entertainment than the public generally:
      1. existing business contacts of the person or the person whose business, goods, or services are being advertised or promoted:
        1. employees of the person or the person whose business, goods, or services are being advertised or promoted:
          1. anyone associated with the person or the person whose business, goods, or services are being advertised or promoted.

          2. The limitation rule does not apply to a deduction for expenditure on entertainment that is merely an incidental part of—

          3. a trade display mainly held to advertise or promote a business, goods, or services:
            1. a function open to the public and mainly held to advertise or promote a business, goods, or services.

              1. The limitation rule does not apply to a deduction for expenditure on samples that a person provides for promotion or advertising purposes to anyone who is not an employee of or associated with the person.

              2. The limitation rule does not apply to a deduction for expenditure on entertainment that a person provides to a person who is reviewing the entertainment for a book, magazine, paper, or other medium of communication.

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