Can You Write Off Golf as a Business Expense?

The rules for deducting golf as a business expense have seen significant changes due to the Tax Cuts and Jobs Act (TCJA). This legislation reshaped business entertainment deductions, creating confusion for many business owners. This article clarifies the current tax rules, explaining the general prohibitions and the specific circumstances under which certain golf-related costs might be deductible.

The Ban on Deducting Entertainment Expenses

The Tax Cuts and Jobs Act of 2017 instituted a broad ban on deducting most business-related entertainment expenses. Under this law, costs for activities considered entertainment, amusement, or recreation are no longer deductible. This includes taking a client to a sporting event or for a round of golf, meaning direct costs like green fees and cart rentals cannot be written off.

This prohibition applies even if substantial business discussions take place before, during, or after the entertainment activity. Before the TCJA, businesses could deduct 50% of such expenses, but that provision was eliminated for expenses incurred after December 31, 2017. The law also disallows the deduction of membership dues for any club organized for business, pleasure, or social purposes. This means annual dues paid to a country club or golf club are not deductible.

The core of this change is found in Section 274 of the Internal Revenue Code, which now broadly disallows any deduction for entertainment. The IRS has provided guidance confirming this interpretation. The intent of the law was to close what was seen as a loophole that allowed the government to subsidize personal recreation under the guise of business development.

Deducting Business Meals at a Golf Course

While the cost of golf is nondeductible, an exception exists for food and beverage expenses incurred at a golf course. Business meals may be 50% deductible if they meet specific criteria set by the IRS. This rule allows businesses to deduct half the cost of meals with clients or prospects, provided the primary purpose is business-related, creating a distinction between the entertainment and the meal.

To claim this deduction, the cost of the food and beverages must be stated separately from the cost of the entertainment on the bill or invoice. For example, if a golf club provides a single bill for a round of golf and lunch, the portion for lunch must be itemized. If it is not, the entire expense is considered a nondeductible entertainment expense, making detailed receipts necessary.

Several other conditions must be met for the meal to qualify. The expense cannot be lavish or extravagant, and the taxpayer or an employee must be present when the food and beverages are served. The meal must be provided to a current or potential customer, client, or similar business contact. Proper documentation is necessary, requiring records of the meal’s cost, date, location, business purpose, and the business relationship of the individuals involved.

Charity Golf Events as a Business Expense

Participating in a golf tournament organized by a qualified charitable organization presents a different opportunity for a tax deduction. When a business pays to participate in a charity golf event, the expense is treated as a charitable contribution, not entertainment. The rules for charitable contributions require that the donor reduce their deduction by the fair market value (FMV) of any benefit they receive in return.

For a charity golf tournament, the benefits received include the round of golf, use of a cart, and any meals or refreshments provided. The business must subtract the FMV of these goods and services from the total amount paid to the charity. For instance, if a business pays $2,000 for a foursome in a tournament and the charity determines the value of the benefits is $500, the business can claim a charitable contribution deduction of $1,500.

Proper documentation from the charity is required for claiming this deduction. For any single contribution of $250 or more, the business must obtain a written acknowledgment from the charitable organization. This document must state the amount of the contribution and include a good-faith estimate of the value of the goods and services the organization provided in return. Without this receipt, the IRS can disallow the deduction.

Golf Expenses as an Advertising or Promotional Cost

Certain golf-related expenditures can be fully deductible as advertising or promotional expenses. The distinction is whether the expense is for entertaining a specific client or for promoting the business to the general public. When the primary purpose is broad-based promotion, the cost is not subject to the entertainment disallowance rules and can be written off as a business expense.

A common example of a deductible advertising expense is the cost of sponsoring a hole at a golf tournament. The fee paid for sponsorship, which includes placing a sign with the company’s name and logo at a tee box, is 100% deductible. This is because the sign promotes the business to all tournament participants and spectators, not just a select few, and is viewed as a marketing activity.

Similarly, the cost of branded items, such as golf balls, towels, or shirts featuring the company logo, can be deductible as a promotional expense. The context of their distribution is important. If these items are given away to the public at a trade show or as part of a broad promotional campaign, their cost is fully deductible. If a business owner gives a single logoed golf shirt to a specific client they are playing with, the IRS is likely to classify this as part of a nondeductible entertainment activity.