Jackie owns a temporary employment agency that hires personnel to perform accounting services for clients. During the year, her entertainment expenses for her clients include the following:
Cab fare to and from restaurants ………….$ 350
Gratuity at restaurants ……………………. 300
Meals ……………………………………… 4,000
Cover charges …………………………….. 250
Jackie also held a holiday party for her employees, which cost $1,500. All expenses are reasonable.
a. Can Jackie deduct any of these expenses? If so, how much?
b. How is the deduction classified?