Question

Joyce Williams paid $15,000 to join a country club in order to meet potential clients.. Joyce is a self-employed image consultant. This year, she paid $4,300 in greens fees when golfing with clients. She also paid $2,500 for meals at the club when dining with clients. She is planning to deduct $21,800 this year. What amount can she decduct? (what are the rules and sections)?

Joyce Williams

425 May Avenue

Oklahoma City, OK 73152

Answer 1

As per Section 162 of Internal Revenue Code, the expenses related to business can be deductible for the purpose of calculation of taxes. But some expenses are denied for deduction under certain sections.

It was clearly mentioned in Publication 463 of the IRS that expenses due or paid to certain clubs (entertainment) are not to be allowed as dedction for the purpose of calculation of taxes, though business deals are done there and its done to promote business, as they are considered as recreational and personal activities. Certain clubs include country clubs, golf and athletic clubs, hotel clubs etc.. The membership fees paid to such clubs, amounts paid for the meals and even the green fees paid when golfing are not eligible for deduction as they are considered as part of recreational and personal expenses.

Hence, expenditure paid for golf club membership to promote business, meals while communicating with clients and green fees paid while golfing are not eligible for deduction. Joyce Williams hence cannot deduct any amount out of $21,800 this year.