Henry entertains several of his key clients on January 1 of the current year.Expenses paid by Henry are as follows: Presuming proper substantiation, Henry's deduction is:
A)$1,220.
B)$740.
C)$640.
D)$610.
E)None of the above.

Question

Henry entertains several of his key clients on January 1 of the current year.Expenses paid by Henry are as follows:  Presuming proper substantiation, Henry's deduction is:
A)$1,220. 
B)$740. 
C)$640. 
D)$610. 
E)None of the above.

Quizplus · Accepted Answer

The deduction for business entertainment expenses is limited to 50% of the actual cost. Thus, the 50% limit calculation is as follows:

$640 (total expenses) ÷ 2 = $320 (50% limit)

Therefore, the maximum allowable deduction for Henry's entertainment expenses is $320.

Henry Entertains Several of His Key Clients on January 1