20.23 Entertainment Facilities and Club Dues

You may not deduct the expenses of maintaining and operating facilities used to entertain clients and customers. By law, entertainment facilities are not considered business assets. Examples of entertainment facilities are yachts, hunting lodges, fishing camps, swimming pools, tennis courts, automobiles, airplanes, apartments, hotel suites, or homes in a vacation area. A season box seat or pass at a sporting event or theater is not considered an entertainment facility; see the special rule for skybox rentals (20.25).

The disallowance rule applies to operating expenses such as rent, utilities, and security, and also to depreciation, but not to such expenses as interest, taxes, and casualty losses that are deductible without having to show business purpose.

Exceptions.

A deduction may be allowed for expenses such as the cost of food and drinks incurred at an entertainment facility, if they meet certain rules (20.17–20.22).

Club dues.

You may not deduct dues for country clubs, golf and athletic clubs, airline clubs, hotel clubs, business luncheon clubs, and other clubs organized for business, pleasure, recreation, or other social purposes. However, IRS regulations generally allow a deduction for dues paid to (1) civic or public service organizations such as Kiwanis, Lions, and Rotary clubs; (2) professional organizations such as medical or bar associations; and (3) chambers of commerce, trade associations, business leagues, real estate ...

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