Many customers ask us if they can deduct club dues. It’s a logical question, especially since you may entertain customers at your club. Many feel it’s relevant to business.
These dues may or may not be deductible, depending on the type of club and its purpose.
Instances Where Club Dues Are NOT Deductible
Your business generally can’t deduct dues paid to a club organized for business, pleasure, recreation or other social purposes.
This disallowance rule includes:
- Country clubs
- Golf clubs
- Business luncheon clubs
- Athletic clubs
- Airline and hotel clubs
Business Meals: Deductible
However, you can deduct 50% of the cost of otherwise allowable business meals at a club, even if the dues you pay to the club are nondeductible. For example, if you have a business dinner with a client at your country club, 50% of the cost of the dinner is deductible as a business expense.
Professional Organization Dues: Usually Deductible
The club-dues disallowance rule generally doesn’t affect dues paid to professional organizations.
You can usually deduct dues paid to professional organizations including:
- Bar associations and medical associations
- Civic or public-service-type organizations, such as the Lions, Kiwanis, or Rotary clubs
- Local business leagues, chambers of commerce and boards of trade
The dues paid to these organizations aren’t considered nondeductible club dues.
However, if an organization’s principal purpose is to provide entertainment facilities to its members, or to conduct entertainment activities for them, then the disallowance rule applies.
Finally, keep in mind—even if the organization dues paid are exempt from the general club dues disallowance rule—you must show that the amount you pay is an ordinary and necessary business expense to deduct your dues.
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