ASK MICKEY, CPA
QUESTION: I’m planning a summer picnic for my employees-Can I still deduct a employee outing or team building activity?
ANSWER: Yes, your business can still deduct qualified expenses if certain requirements are met. In fact, you might be able to write off the entire cost. The tax law changes don’t affect a special tax law provision that says you can deduct 100 percent of the cost for company picnics and similar gatherings. This provision wasn’t affected by the other tax changes in this area. Just remember: To qualify for this deduction, you must invite the entire staff to the picnic. In other words, you can’t restrict the outing to a select group.
For instance, suppose a few friends or relatives crash the party. This won’t jeopardize the overall deduction, but expenses attributable to those social guests are nondeductible. For instance, if the picnic costs $5,000 for 48 employees and two guests show up, you can deduct $4,800 (96 percent of $5,000).
This is a unique opportunity to take advantage of a tax break while rewarding employees.
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