December 10, 2021
Many of you may be interested to know what kind of expenses can be recorded as business expenses. In this article, we will discuss whether club dues can be deducted. In general, dues paid to social, athletic, sporting, airline, hotel, luncheon clubs are not deductible. The IRS generally considers these organizations to be providers of entertainment for their members. However, you can deduct other business expenses, such as meals paid at the club, if you meet the other requirements for deducting business expenses. For example, if you take your client to your club for lunch during which a substantial and bona fide business discussion takes place you may deduct 50 % of the cost of the lunch just as you would for a business meal in any restaurant. A 100% deduction is allowed for business meal food and beverage expenses provided by a restaurant paid or incurred in 2021 and 2022.
The following are not considered clubs for purposes of the disallowance rule:
Business leagues.
Trade associations.
Chambers of commerce.
Boards of trade.
Real estate boards.
Professional organizations (such as bar associations and medical associations)
Civic or public service organizations (such as Kiwanis, Lions, Rotary, Civitan and similar organizations).
Dues paid to these professional associations, trade associations, and public service groups may be deductible if the dues are paid for business purposes and the organization's principal purpose is not to provide entertainment for members or their guests or to provide use of entertainment facilities to those parties.
Finally, for tax consequences, a club's activities, not its name nor your reason for joining, control whether the IRS determines if it exists to entertain its members or if it has a business or social service purpose.
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