Can I Write Off Golf as a Business Expense?

Golf activities are often associated with business networking, leading many to question their deductibility as business expenses. Tax rules for business expenses, particularly those related to entertainment, have undergone significant changes in recent years. Understanding these regulations is important for business owners and self-employed individuals. This article clarifies current Internal Revenue Service (IRS) guidelines regarding golf-related expenses.

Understanding Business Entertainment Deductions

For many years, businesses could deduct a portion of client entertainment expenses, including activities like sporting events, concerts, or golf. However, the Tax Cuts and Jobs Act (TCJA) of 2017 brought substantial changes to these rules. As a general rule, business entertainment expenses are no longer deductible.

The cost of activities considered entertainment, such as a round of golf with a client, is not deductible. The IRS broadly defines entertainment to include any activity generally considered recreation or amusement. Even if the activity’s purpose is to build client relationships or generate new business, the entertainment expense remains non-deductible.

This non-deductibility applies regardless of how strong the business connection might be. For instance, if you take a potential client golfing, greens fees or other direct costs of the golf activity cannot be written off. Discussing business during the activity does not change its classification as a non-deductible entertainment expense.

Deductible Golf-Related Expenses

While golf entertainment costs are generally not deductible, certain expenses incurred during or around a golf activity might qualify for a deduction. Food and beverages consumed during business discussions can be 50% deductible if specific conditions are met. Meals must be ordinary and necessary, not lavish or extravagant, and the taxpayer or an employee must be present. A business discussion must occur directly before, during, or after the meal.

For example, if you have lunch with a client at the clubhouse before or after a round of golf to discuss business, 50% of that meal’s cost could be deductible. The cost of food and beverages must be separated from any non-deductible entertainment costs on the bill or receipt. This ensures only the qualifying meal portion is considered for the deduction.

Employee recreation and social activities are another exception. Expenses for activities primarily benefiting employees, such as a company-wide golf outing, can be 100% deductible. These activities must be open to all employees, not primarily for highly compensated employees or significant owners. The intent is to promote employee morale and welfare, distinguishing them from client entertainment.

Golf club memberships are generally not deductible, even if used for business purposes. The IRS views dues for clubs organized for pleasure, recreation, or social purposes as non-deductible entertainment facilities. This rule applies regardless of how often the membership is used for business discussions or client interactions.

Required Documentation for Deductions

Meticulous record-keeping is required for substantiating any business expense, including golf activities that qualify for a deduction. The IRS requires taxpayers to maintain adequate records to establish the elements of each business expense. This includes the amount, date, place incurred, business purpose, and the business relationship of people involved.

For meals and other deductible golf-related expenses, you should keep detailed records like receipts or invoices. These documents should clearly show the payee, amount paid, proof of payment, and a description of the item or service. Beyond receipts, keep a log or diary noting the business discussion, attendees, and specific business purpose for the expense.

Records should be made at or near the time the expense is incurred to ensure accuracy and meet IRS substantiation requirements. Digital apps, spreadsheets, or physical filing systems can be used to organize these records efficiently. Business records, including those for deductible expenses, should be kept for at least three years from the tax return filing date.