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deductible. Sec. 1.162-4, Income Tax Regs.
No deduction is generally allowed for amounts paid or
incurred for membership in any club organized for business,
pleasure, recreation, or other social purpose. Sec. 274(a)(3).
Under section 274(a)(1), no deduction otherwise allowable shall
be allowed for any item with respect to a facility used in
connection with an activity which is of a type generally
considered to constitute entertainment, amusement, or recreation
unless the taxpayer establishes that the item was directly
related to the active conduct of a trade or business or related
to a substantial and bona fide business discussion. Dues or fees
paid to any social, athletic, or sporting club or organization
shall be treated as an item with respect to facilities. Sec.
274(a)(2)(A). In the case of a club, the taxpayer must establish
that the facility was used primarily for the furtherance of the
taxpayer’s trade or business and that the item was directly
related to the active conduct of such trade or business. Sec.
274(a)(2)(C).
No deduction shall be allowed for an item with respect to an
activity which is of a type generally considered to constitute
entertainment, amusement, or recreation, or with respect to a
facility used in connection with such an activity unless the
taxpayer substantiates the deduction. Sec. 274(d)(2). The
taxpayer must substantiate by adequate records or sufficient
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