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SEC. 274. DISALLOWANCE OF CERTAIN ENTERTAINMENT, ETC.,
EXPENSES.
(a) Entertainment, Amusement, or Recreation.--
(1) In general.--No deduction otherwise
allowable under this chapter shall be allowed for
any item--
(A) Activity.--With respect to 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, or, in the case of an item
directly preceding or following a substantial
and bona fide business discussion (including
business meetings at a convention or
otherwise), that such item was associated
with, the active conduct of the taxpayer’s
trade or business, or
(B) Facility.--With respect to a
facility used in connection with an activity
referred to in subparagraph (A).
In the case of an item described in subparagraph
(A), the deduction shall in no event exceed the
portion of such item which meets the requirements
of subparagraph (A).
(2) Special rules.--For purposes of applying
paragraph (1)--
(A) Dues or fees to any social,
athletic, or sporting club or organization
shall be treated as items with respect to
facilities.
(B) An activity described in section 212
shall be treated as a trade or business.
(C) In the case of a club, paragraph
(1)(B) shall apply unless the taxpayer
establishes that the facility was used
primarily for the furtherance of the
taxpayer’s trade or business and that the
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