Those who believe that boxing has simply become a circus-like spectacle may be proven right this weekend when UFC champion Conor McGregor steps into the ring to face former champion Floyd “Money” Mayweather, Jr. The exhibition is expected to be a pay-per-view bonanza for both fighters. Both are expected to take in nearly $100 million.
Given the interest in this spectacle, the resale market for tickets has exploded. Some fans are paying “Super Bowl” like prices to get the best seats. Usually tickets to sporting events may be written off as reasonable business expenses under IRS Publication 463, which calls for such expenses to be either “directly related” or “associated” with the active conduct of the business.
But how does one demonstrate that attendance at a boxing match (or any other sporting event, for that matter) satisfies one of these tests? It essentially has to do with whether you have a clear business purpose for the expense. The purpose could be to get new business, or simply to foster the continuation of a current relationship. It is not far-fetched to believe that a client would want to continue to do business if they are rewarded by going to a fight.
If you expense qualifies, you could seek a deduction, along with up to 50 percent of the cost of associated food and drink consumed at the game. There’s one caveat, however. If the expenses are “lavish and extravagant” there may be problems with the deduction.
If you have questions about client entertainment expenses and whether they may be deducted, an experienced tax attorney can advise you.