Sly and Suzy own a bar and restaurant that specializes in serving local breweries’ beverages. They frequently visit their vendors and pay for the meals and entertainment.
Sly and Suzy have hired you as their new accountant because the previous accountant was too conservative for them. They feel they are missing out on deducting legitimate business expenses on their tax return. In 2023, their QuickBooks account reflects \($8,000\) in entertainment expenses and \($12,000\) for business meals served in a restaurant. They would like to deduct all of these expenses because they are all business related. Prepare a memo to Sly and Suzy and an internal research memo for their file explaining your findings. You may wish to refer to Chapter 10, Business Expenses, to locate references to the primary authority for these issues.