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QUESTION.

After work, I frequently go to "happy hour" with a number of coworkers. I've heard that this can be tax deductible? Surely this can't be true, but if it were, what could I do to ensure that it would be a completely legitimate deduction that would absolutely bullet-proof to an I.R.S. audit?

STRATEGY #1:

It's true! It's true! It's true! That's the rule!

  • Discuss your work with your coworkers!
  • Don't forget to deduct the taxi ride home if you had a bit too much to drink too!
  • Legal Reference, the Laurie O'Donoghue case.


    Now you know the rule, create your bulletproof documentation:
    On your receipt you will need to jot down:

 
  1. Documented business purpose with the keyword "LEARN", followed by a brief description of what was learned specifically. The key here is to learn something from coworkers by sharing professional information, discussing relevant business events of your profession and aspects of job knowledge with each other. Learning does not stop after you leave school, it a life-long activity that can be deductible because it produces a future benefit for your business.
  2. Who? The name of the coworker(s) must be given (or prospect, or client).
  3. What? Evidence of the nature of the expense is required… was it breakfast, lunch, dinner, or snacks and drinks. Jot this down or save the itemized receipt of your purchases.
  4. Where? The place and circumstances must be established to be appropriate and conducive to conducting business. A restaurant or bar is perfect, and when you pay by credit card the name and address of the establishment is already documented on the receipt for you!

 

“The income tax has made more liars out of the American people than golf has.
Even when you make a tax form out on the level,
you don’t know when it's through if you are a crook or a martyr.”
Will Rogers

 
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