Case: Case Study 3, Trade or Business Deductions Facts: Dee Bater, a calendar year taxpayer, has a very successful law practice. On January 1, 2012 she purchased a country club membership which she uses partly for professional purposes. An analysis of her bills for 2011 shows her use of the club for the year to be as follows: Dinner with husband and family with purchase of drinks for any clients who happen to be present at the club, $240 Golf with present clients which was preceded or followed by a business discussion, $650 Golf with present clients during which some business was discussed, $200 Lunch with prospective clients during which some business was discussed, $470 Personal use of club facilities, $460 Lunch with prospective clients, on days when the Bater family used the club swimming pool, during which some business was discussed, $250 Lunch with present clients in order to discuss business $700 Luncheon with other attorneys to negotiate various matters pertaining to client affairs during which some business was discussed $400 Dinner with client attended by Dee Bater's husband and client's wife during which some business was discussed $200 Parties were given for current and prospective clients. The guest list included 50-100 people and Bater's employees were asked to attend and mingle $4,500 Yearly club dues were $3,000. Issue (1): Are the $3,000 club dues deductible? Law: IRC §162(a) Trade or business expenses: There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business
IRC §274(a)(1)(A) Disallowance of certain entertainment, etc., expenses: Denial of deduction for club dues. Notwithstanding the preceding provisions of