Football Season is Here – Deducting Sporting Event Tickets

Your Guide to State, Local, Federal, Estate + International Taxation

Football season is here! Are you going to the game? Tailgating? Deducting sporting event tickets?

As most companies like to take clients out to sporting events and deduct tickets, please keep in mind that you need to meet certain criteria to do so.

First of all, the sporting event needs to be directly related to the conduct of business, meaning the employee needs to actively engage in some sort of business purpose (meeting, negotiation or other types of business purpose) during the event.

This also means giving a ticket to an employee and or client does not mean instant deduction. Your deduction could be considered a “gift” which could be deducted only to the extent that total gifts during the year do not exceed $25. If it exceeds $25, as most football game tickets do, then your deduction will be disallowed.

The other stipulation that most people are unaware of but could disallow your deduction is what the IRS labels as “substantial distractions” at the event. Yes, the IRS can disallow your deductions for “substantial distractions”. An example is disallowing your general admission or general seating tickets, because you have the “substantial distraction” of the volume of the general audience meaning it isn’t likely that you could conduct any business given the distraction. So, if you are taking a client out to the ball game (I know that is a baseball reference, but this is still a ball game), then it is recommended to get tickets for business purposes in the suites (save the general seating for gifts) or somewhere less distracting, or you could also conduct the business before or after the sporting event, just make sure to document it, and probably not during tailgating, because well…distractions again.

Which this feeds into another reminder – watch out with those luxury suite tickets, because they are limited to the face value of non-luxury box seats. Yes, the IRS can take away your general seating deduction and if you go too high, they will limit your business deduction for luxury suites as well. The highest face value of non-luxury box seats (offered to the public, not private) may be used in determining the limitation.

Finally, tickets purchased for family members of employees, clients, or prospects can be deducted…as long as it is your spouse, because Regs. Sec. 1.274-2(d)(2) only mentions spouses and no other family members.

Oh and the last thing to remember is…take your cost or limit amount and cut that in half – 50% for meals and entertainment expense!

Ok, you are now ready for the game. Woo! Go Cardinals!

By Chris Morrison