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Sports Tickets

Read about sports tickets and how they can be deducted from taxes.

Sporting events are a common way to entertain clients and boost employee morale. [©Jupiter Images, 2010]
©Jupiter Images, 2010
Sporting events are a common way to entertain clients and boost employee morale.

The Internal Revenue Service (IRS) permits businesses to deduct the purchase of sports tickets expenses either in some portion or their entirety, depending on the situation, from their taxes. Business-purchased sports tickets are often a common, work-related perk. Whether small or large, much of a business success relies on the happiness of its clients. One way to keep those clients happy is for businesses to offer their clients entertainment in the form of sports tickets. Event tickets may also be used as employee incentives, charitable gifts or other types of professional bonuses.

Tax Deductable Entertainment Expense

Sports tickets, along with meals and other pursuits of amusement, can be classified as a tax deductable business entertainment expense if they involve customer or client attendees, business discussions and a reasonable amount of generated business expected from attending such an event. The National Association for the Self-Employed (NASE) advises entrepreneurs and micro-businesses on their tax deductions listing entertainment expenses as one of the top tax tips that often gets overlooked.

In the IRS Publication 463, used for preparing the most recent tax returns, businesses may deduct 50 percent of sports tickets value from their taxes as an entertainment expense as long as they are not lavish and extravagant. In other words, businesses may only deduct 50 percent of the face value of regular, non-luxury tickets. In cases where tickets are purchased for an entire season or in a grouping of more than just one event, the deductable amount of the tickets must be broken down by face value per person, per individual event.

Although somewhat related, dues or fees for things like golf or athletic clubs, do not qualify as IRS tax deductions. Additionally, businesses must keep in mind the $25 gift limit when gifting sports tickets to clients.

Tax Deductable Charitable Contribution

There are exceptions to the 50 percent deductable limit on business entertainment expenses. The IRS explains that if the purchase of sports tickets benefits a charitable organization, businesses may deduct the full cost even if it is greater than the face value of an event ticket if:

  • The main purpose of the event benefits a qualifying charitable organization
  • All net proceeds go to the charity
  • Volunteers are used to work virtually the entire event

A business, for example, may choose to make a sponsorship donation to an IRS-listed charitable organization such as the Make-A-Wish Foundation, which enriches the lives of children with life-threatening medical conditions. In doing so, 100 percent of the paid value of the sports ticket qualifies as an IRS tax deduction.

Situations that do not completely meet these requirements are subject to only a face-value deduction. For example, if sports tickets are for an event that pays staff, such as coaches, then the business should only use the ticket's face value to determine their tax deduction. Another example is if a business makes a contribution to a university and receives the right to preferred seating at sporting events, they can then only deduct 80 percent of the donation. Any amount included for the tickets themselves must first be subtracted from the contribution.

Separating Costs and Record Keeping

Sporting events like the Professional Golfers Association of America (PGA) Tour advertise tax deductable expenses like ticketing packages that include accommodations, dining and parking. In addition to event tickets, businesses are first advised to consult with a tax advisor. Secondly, businesses must also separate travel, meals and entertainment expenses from one another for IRS deduction purposes and there must be a reasonable basis for doing so. Deducting sports tickets may require further dissection if ticket packages include those for non-business related guests or periods of time during such event.

Individual businesses vary as far as the level of record keeping and internal forms they require their employees to keep, either for personal reimbursement or business expenses. Businesses and their employees, however, are instructed by the IRS to keep accurate and detailed written records of sports ticket expenses including the date, location and professional relationship to those attending. Items like receipts, canceled checks and vendor bills prove expenses. Things like verbal approximations do not and are not accepted by the IRS as documentation of qualified deductions. The IRS suggests keeping these records for three years from the date on which the tax return is filed.

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