When I was studying accounting I found it amusing that country clubs dues were specifically listed as not being allowed for deductions for businesses (I think, this was many years ago).
I wonder how much actual business gets done while golfing? I've heard that being a justification for spending loads on country club dues and green fees. Anyone know if it can be that conducive for business?
The partners at OldJob, a CPA firm, did a LOT of networking and glad handing on the golf course, so I think it was good for business. The reason country club dues are specifically listed as nondeductible (still a current rule in the US) is because professional organization fees ARE generally deductible.
Thanks, I was wondering why. I just figured that it was a rider that a congressman(women) inserted into a bill at the last second...maybe as a 'poison pill.'
It was due to the Clinton administration's efforts in 1993 to broaden the tax base, which infuriated the supports of Reagan's 1986 tax reform -- probably most fervently by those accustomed to having their country club fees comped by their employer.
;-)
... sigh... you folks know someone's going to take that seriously, don't you?...
The only organizations for which membership dues or donations can be written off as part of a Schedule A itemized tax return (for an individual) are the ones that exist primarily for a charitable purpose. The IRS has a laundry list of activities it considers charitable. These range from education to poverty relief to religion to the promotion of amateur or professional sport. (MLB and the NBA, for example, are 501(c)3 tax exempt organizations, and so was the NFL until very recently). There are certain rules about how they have to be set up: they cannot have owners or shareholders, for example, but that doesn't stop them from having some very higly paid employees or for benefiting some extremely wealthy people or some privately held companies.
Service clubs like Civitan, Kiwanis, and Rotary are set up for a charitable purpose, so they have tax deductible dues, and donations to them are tax deductible. Same goes for the Order of the Royal Purple and plenty of other religious-oriented charitable organizations. If you've got a church that collects regular dues, tithes, or donations those are deductible since the primary purpose of the organization is one of the charitable activities set out by the IRS. By contrast, fraternal organizations that do charitable work as an outgrowth of their primary fraternal activity (like the Shriners, Eastern Star, or pretty much all the Masonic groups) don't have deductible memberhip dues. Nor does your local golf club, kink and fetish club, or private gym.
The IRS does not allow membership dues to private clubs to be written off the way dues for charitable organizations can be, because private clubs exist to benefit the members only. Membership is also voluntary and frequently determined by existing members, such that new members require sponsorship of existing members prior to being accepted. Furthermore, membership is not a condition of employment anywhere or granted automatically to employees of a specific company (the way it is for trade unions, or for members of professions that cannot legally practice without having current state Bar or medical association membership). Private clubs can and do discriminate based on gender, social status, age, race, and pretty much every other attribute you can think of. So people who pay membership dues in private clubs don't get IRS kisses for it at tax time.
Now, for business expenses, it's OK for businesses to write off donations to 501(c)3 charities but not other kinds. So if you run a company and make a donation to Habitat for Halibut, and you get a receipt for it, you can claim that donation as a business expense and use it to reduce tax liability if you have offsetting income. Similarly, you can sponsor a thing-a-thon and claim it as an advertising expense. But when it comes to a thing sometimes used for business entertaining, the IRS will get its pound of flesh if the expenses are anything but "ordinary and necessary". They have to be directly related to the business transaction, and they have to be associated with the business.
Entertainments tied to an individual (the way a golf club membership is), generally have to be reported as taxable income by the individual who receives the benefit from the company, if the individual who has it does not need it to do his or her job and accrues any side benefit from it. It's actually possible to be a Realtor (R), a surgeon, or a minister without golfing.
Whether a company can deduct corporate entertainment expenses is fairly limited these days due to some well publicized excesses involving some defense contractors and other industrial bigwigs who decided to give and receive lavish entertainments and gifts at home and overseas, then declaring their graft as a deduction for tax purposes (and screwing over not just the taxpayers but also their shareholders). Nowadays, if a company owns a set of, say, NHL season tickets used for business entertaining, they frequently have to go game by game when determining which seat was deductible and which isn't. If the president of the company simply uses the tickets for social purposes and tries to write it off as a business expense, it's often anal-probe-audit time for both the company and the person who uses the tickets as in-kind income.
It's true that hanging out socially can be good for building a business relationship and conducting informal negotiation, but that doesn't mean that the recreation is necessary to doing business.
Topic: Relatives who just don't get it (Read 3680755 times)
