How to Write Off Your Golf Membership

The idea of writing off a golf membership is appealing, but it is a common misconception. The ability for businesses to deduct these types of expenses was changed by the Tax Cuts and Jobs Act of 2017 (TCJA). This legislation broadly eliminated deductions for expenses related to entertainment, amusement, or recreation. Consequently, the direct cost of a golf club membership is no longer a deductible business expense.

The Nondeductibility of Club Membership Dues

Section 274 of the Internal Revenue Code bars any deduction for amounts paid for membership in any club organized for business, pleasure, recreation, or other social purposes. This rule is comprehensive, covering organizations beyond just golf clubs, such as country clubs, athletic clubs, airline clubs, and hotel clubs.

The prohibition on deducting membership dues is absolute and applies regardless of how frequently you use the facility for business activities. Even if a visit involves a substantial business discussion, the membership cost remains nondeductible. The law makes no provision for prorating dues based on business use.

This means that initiation fees and any subsequent periodic dues are treated as personal expenses for tax purposes. The nonprofit status of a club has no bearing on the deductibility for its members.

Deductible Business Expenses at a Golf Club

While membership dues are not deductible, certain other business-related costs incurred at a golf club may be. The primary exception is business meals. The tax code allows for a 50% deduction for the cost of food and beverages if the expenses are ordinary and necessary.

To qualify for the 50% deduction, the meal expense cannot be lavish or extravagant. The taxpayer or an employee must be present when the food or beverages are furnished. The meal must be provided to a current or potential business customer, client, or consultant, and a clear business purpose must be established.

The cost of the actual round of golf is considered a nondeductible entertainment expense. If you pay for a client’s greens fees and then have lunch, only the cost of the food and beverages, stated separately on the bill, is potentially 50% deductible.

A separate rule allows for a 100% deduction for food and beverage expenses related to certain company-wide events. If you host a holiday party or a summer picnic for all your employees at the golf club, the costs for food and drinks can be fully deducted.

Required Documentation for Business Expenses

To claim any deduction for business expenses at a golf club, you must maintain detailed records. The Internal Revenue Service (IRS) has specific substantiation requirements for meals, and failure to keep adequate records can result in the disallowance of your deductions during an audit.

For each business meal expense, you must record:

• The total amount of the expense, with an itemized receipt that breaks down the cost of food and beverages.
• The date of the meal and the name and location of the club.
• The business purpose of the expense, including the specific topic discussed.
• The business relationship of the individuals present, including their names, titles, and companies.

Keeping a contemporaneous log or diary of these expenses is recommended. This means recording the details at or near the time of the expense, when your memory is fresh. Relying on memory or trying to recreate records months later is often insufficient and can be challenged by the IRS.

How to Claim Deductions on Your Tax Return

After documenting your deductible meal expenses, you must report them correctly on your business tax return. The specific form and line number depend on your business structure.

For sole proprietors and single-member LLCs who file a Schedule C (Form 1040), deductible meal expenses are reported on Line 24b. You will calculate the total meal expenses for the year and then apply the 50% limit before entering the final amount.

Partnerships use Form 1065, while S corporations use Form 1120-S. On both forms, the full amount of the meals is reported under “other deductions” with an attached statement. The 50% limitation is then applied when calculating the net income passed through to the partners or shareholders.