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Section 274(a) provides, in pertinent part, that no deduction
otherwise allowable shall be allowed for entertainment,
amusement, or recreation expense unless the taxpayer establishes
that the expense was directly related to the active conduct of
the taxpayer’s trade or business. Section 274(b) provides, in
pertinent part, that no deduction shall be allowed under section
162 for any gift to the extent that the gift, together with other
gifts to the same individual for the same taxable year, exceeds
$25. Section 274(d) requires a taxpayer to substantiate a
claimed expense that is covered by section 274 by adequate
records or by sufficient evidence corroborating the taxpayer’s
own statement establishing the amount, time, place, business
purpose of the expense, and the business relationship to the
taxpayer of the persons entertained or receiving the gift.
Section 274(k) provides in pertinent part that no deduction is
allowed for any food or beverage expense unless the expense is
not lavish or extravagant under the circumstances and the
taxpayer or an employee of the taxpayer is present at the
furnishing of the food or beverage expense.
Section 274(n) provides that the amount allowable as a
deduction for food and beverage expense and entertainment expense
shall not exceed 80 percent of the amounts that would be
deductible but for section 274(n). However, meals that qualify
as de minimis fringe benefits are not subject to the 20-percent
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