Question

Holly took a prospective client to dinner, and after agreeing to a business deal, they went to the theater. Holly paid $290 for the meal and $250 for the theatre tickets, amounts that were reasonable under the circumstances. What amount of these expenditures can Holly deduct as a business expense?

a) $540
b) $270
c) $145
d) $125
e) none- the meals and entertainment are not deductible except during travel

Answer 1

a) $540

Step-by-step explanation:

Since the value of the expense were considered by the company as normal and reasonable under the circumstance, the total of $540 representing $290 for meal and $250 for tickets are treated as business expenses.