Entertainment

/

ArcaMax

Fewer ballgames, more steak dinners: Corporate entertaining changes after tax deduction goes away

Samantha Bomkamp, Chicago Tribune on

Published in Entertainment News

CHICAGO -- In Darryl Jacobs' line of work, it's a tough year to be a sports fan.

It has nothing to do with the performance of the Chicago tax attorney's favorite teams. Instead, a tax code change that strips away a popular business entertainment deduction has cut into his ability to hobnob with clients at sporting events, theaters and concert venues.

Jacobs, an attorney at Ginsberg Jacobs in Chicago, said the change has already affected the way his firm does business.

The firm bought half as many Cubs season tickets this year as it did last. Many of its White Sox season tickets, which used to be tax-deductible when used to entertain clients, are now being donated by the firm so that their cost can instead be deducted for charitable purposes.

"What I'm seeing from my clients -- and us too -- we're shying away from entertainment like concerts and sporting events," Jacobs said. "It's become a different environment now."

Before this year, a business could deduct 50 percent of the cost of a ticket to an event when entertaining clients, whether for a White Sox game, a concert or a theater performance. But under the tax reform act passed last year, that deduction is gone, although companies are still permitted to deduct 50 percent of the cost of businesses meals, including those that involve entertaining clients.

That change has caused more than a few headaches for businesses who rely on perks to seal client relationships. And some business owners and sports industry watchers say the elimination of the deduction could cause ticket and suite prices across sports stadiums, theaters and other venues to stall or decline, as critical corporate clients cut back.

There are still a number of unanswered questions about the change, like what counts as entertainment and what can be categorized as a meal. (A hot dog at the ballpark? Dinner after the game?)

The IRS is expected to issue more details about the tax code change this summer. Until then, while some firms are making immediate changes in how they entertain, many others are "cautiously continuing what they did in the past," said Brian Ray, a Maryland accountant who works for Hertzbach & Co.

In some cases, that's not necessarily by choice.

...continued

swipe to next page
 

Comments

blog comments powered by Disqus