Alice, the chair of the School of Accountancy, entertains the faculty at her home each semester and...

Question

Alice, the chair of the School of Accountancy, entertains the faculty at her home each semester and has a holiday party at the end of December for the faculty and their families. When a faculty member is promoted or has a paper published in an exceptionally prestigious journal, Alice hosts a “social hour” at her house. She also sponsors a picnic for the faculty and graduate students at the start of the fall semester to let them get acquainted with each other. To what extent are these expenses deductible?

Robert · Accepted Answer

Entertainment expenses which are ordinary as well as necessary in carrying trade or business of a 
person may be deductible in case it met any of the one test or both of them: 
 The test for checking whether the expenses are directly related (Directly related test) 
 Associated test 
For claiming the deduction, person has to provide the records to prove that expense have been 
made for the business purpose along with the amount, date and place of the expenditure.

Alice, the chair of the School of Accountancy, entertains the faculty at her home each semester and has a holiday party at the end of December for the faculty and their families. When a faculty member...

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