TAX DEDUCTIONS FOR ENTERTAINING A CLIENT

As a stock photographer, there are many situations where you are expected to entertain your clients, models, and business associates. This may be in your home-- (if you maintain a home office), or in public facilities.

The IRS rules regarding tax deductions for business meals and entertainment undergo changes as the economy and administration in Washington changes. Be sure to check with a tax professional about these changes-- depending on when you are reading my column.

Winers and diners take a big hit under recently revised rules. There is a cap on deductions for business meals and entertainment.

Expenses included and excluded from 50-percent ceiling. Besides meal and entertainment charges, expenses subject to the ceiling include meal- or entertainment-related taxes and tips, cover charges for nightclub admission, room rentals for dinners or cocktail parties and parking at sports arenas, but not transportation to and from business meals, such as cab fares to restaurants or theaters.

Example: The charge for business meal comes to $80, which includes $65 for food and beverages, $5 to sales taxes and $10 for tips. The limited on the deduction is $40, which is 50 percent of $80. However, cab fare to the restaurant of $6, including tip, is 100 percent deductible.

Next month, I'll point out tax guidelines for deductions for entertaining at home.