First, Be Careful With Outdated Entertainment Guidance
Some older IRS publications still circulating online state that client entertainment may be deductible when it is “directly related” to business or takes place before or after a substantial business discussion. The IRS FAQ attached to this article, for example, discusses those former tests and describes many entertainment expenses as subject to a 50% limitation.
Those rules generally no longer apply to client entertainment. The Tax Cuts and Jobs Act eliminated the deduction for most entertainment expenses incurred after 2017. Current IRS guidance specifically identifies sporting events as entertainment and states that the cost of tickets used to entertain business contacts is generally nondeductible. (IRS)
That distinction is important because business owners may still encounter websites, articles and IRS documents based on the former rules.
1. Buying Season Tickets Through Your Business Does Not Make Them Automatically Deductible
The name on the invoice is not what determines the deduction.
A business could pay for the entire season-ticket package, but each use of the tickets may receive a different tax treatment. The business must look at who received the tickets and why they were used.
The package could ultimately include:
- Tickets used for qualifying employee outings
- Tickets used to entertain clients or prospects
- Tickets given directly to individual employees
- Tickets used personally by an owner or family member
- Tickets that were transferred, donated or never used
Only the portion meeting a specific tax exception may qualify for a deduction.
The safest statement for business owners is:
The portion of season tickets used for qualifying employee recreational, social or similar activities may be 100% deductible.
That is very different from saying that the business can deduct 100% of the season-ticket package merely because employees attended some of the games.
2. Client Entertainment Remains 0% Deductible
Suppose you invite a client, prospect, referral partner, vendor or other business contact to a Sixers game. You may discuss business before the game, talk about a future contract during halftime and believe the outing will strengthen the relationship.
The ticket cost is still generally nondeductible.
Current IRS guidance includes an example involving a taxpayer who takes a business contact to a baseball game. The cost of the tickets is treated as entertainment and is not deductible. The same rule would generally apply to a Sixers game. (IRS)
This includes situations in which:
- You attend the game with the client.
- You give the tickets to the client without attending.
- The tickets are used as a client-appreciation gift.
- You invite a prospective customer to discuss a potential deal.
- You use the game for networking or relationship building.
A legitimate business purpose does not override the entertainment disallowance.
Food and beverages may be treated differently
Food and drinks purchased at the game may generally be 50% deductible when:
- The business owner or an employee is present.
- The meal has an ordinary and necessary business purpose.
- The expense is not lavish or extravagant under the circumstances.
- The food is purchased separately from the tickets or separately stated on the invoice.
For example, if you buy two tickets for you and a client and then purchase food at the arena on a separate receipt, the tickets are nondeductible, but 50% of the qualifying food and beverage expense may be deductible. (IRS)
Suite packages require additional attention. When the suite price includes tickets, food and beverages in one combined amount, the entire cost may be treated as nondeductible entertainment. The invoice should separately state the food and beverage charge for that portion to have a chance of qualifying for the 50% meal deduction. (IRS)
3. Employee Recreation May Be 100% Deductible—but It Must Be Properly Structured
Section 274 includes an exception for recreational, social or similar activities primarily benefiting employees other than highly compensated employees.
This exception commonly applies to activities such as:
- Holiday parties
- Company picnics
- Summer outings
- Employee-appreciation events
- Team recreational activities
The IRS provides an example in which an employer holds a holiday party for employees. Because the event primarily benefits non-highly compensated employees and does not discriminate in favor of executives or owners, the employer may deduct 100% of the cost. (IRS)
A designated Sixers team night could potentially qualify under the same general principle.
For example, a company might select several games throughout the season as employee-appreciation outings. Employees attend together, the company communicates that the event is intended to recognize the staff, and the opportunity is available to employees under a fair and documented process.
However, the deduction is not automatic. The facts must demonstrate that the activity was genuinely established primarily for the benefit of regular employees.
A stronger employee-ticket program may include:
- A written employee recreation or ticket-use policy
- Advance identification of employee-appreciation games
- Broad eligibility among rank-and-file employees
- A reasonable rotation among departments or staff members
- Documentation showing who received each ticket
- Communications identifying the event as an employee activity
- Consistent accounting and payroll treatment
A business should avoid purchasing tickets mainly for the owner and occasionally allowing employees to attend. That arrangement may look more like owner entertainment than an employee recreational program.
4. Owners and Executives May Attend—But They Cannot Be the Primary Beneficiaries
A common misunderstanding is that an owner, officer or executive cannot attend an employee recreational event.
Their presence does not automatically disqualify the event.
The important question is whether the activity primarily benefits regular employees or whether it discriminates in favor of:
- Highly compensated employees
- Officers
- Shareholders
- Partners
- Owners holding a substantial interest in the business
The IRS rules specifically state that activities discriminating in favor of highly compensated employees, officers, shareholders or owners of at least a 10% interest are not treated as primarily benefiting employees generally. (IRS)
For example, suppose a company has 30 employees and uses its tickets for four employee-appreciation games during the season. Employees from different departments are invited under a rotating system, and the company’s owner attends one of the outings.
The owner’s attendance should not, by itself, destroy the deduction. The larger facts still show that the program primarily benefits the broader staff.
Now consider a business in which the owner, chief executive and two senior managers use the tickets for nearly every game. Once during the season, two regular employees are allowed to attend.
That arrangement is unlikely to support the position that the package was primarily for the benefit of employees generally.
Small businesses must be especially careful
This issue can be more difficult for a company with only a few employees.
Suppose an S corporation has one shareholder-employee and two regular employees. The owner should not assume that every game attended with the employees automatically qualifies as a 100% deductible staff outing.
The company should be able to show:
- The outing was organized as an employee event.
- The regular employees were genuine beneficiaries.
- The tickets were not simply purchased for the owner’s personal enjoyment.
- The arrangement did not disproportionately favor the owner.
Personal ticket use by an owner may need to be recorded as a nondeductible personal expense, shareholder distribution or taxable compensation, depending on the entity and surrounding facts.
5. An Employee Lottery or Rotation Helps—but It Is Not an Automatic Safe Harbor
A lottery or rotating ticket system may help demonstrate that the benefit is available fairly to employees. However, the IRS does not provide a specific rule stating that every employee ticket lottery automatically creates a 100% deduction.
The program must still satisfy the employee recreation requirements.
For example, a business could establish a written policy stating that:
- All eligible employees may enter.
- Employees are selected randomly or through a rotating schedule.
- Owners and executives do not receive preference.
- The company limits how frequently the same employee may win.
- Certain games are designated as employee-recognition events.
- The company maintains a record of every recipient.
This would generally provide stronger support than an informal system in which the owner decides who receives tickets each week.
However, a fair lottery does not solve every issue. There is still a difference between:
- The company sponsoring a recreational outing for employees; and
- The company giving valuable tickets directly to individual employees for their personal use.
The second situation may create a taxable fringe benefit.
Therefore, a lottery is best viewed as a documentation and nondiscrimination tool, not a guaranteed tax deduction. Whether it qualifies will depend on the entire arrangement.
6. Season Tickets Can Create Taxable Compensation for Employees
The IRS distinguishes between occasional tickets and season tickets.
Occasional tickets to a theater or sporting event may qualify as a nontaxable de minimis fringe benefit when their value and frequency are sufficiently limited. The IRS lists occasional entertainment tickets as an example of a possible de minimis benefit. (IRS)
Season tickets, however, are specifically listed as a benefit that generally does not qualify as de minimis. When a benefit fails the de minimis rules, its value generally must be included in the employee’s income unless another exclusion applies. (IRS)
This distinction becomes important in several situations.
Occasional employee use
Suppose the company gives an employee two tickets to one regular-season game as part of an occasional recognition award.
Depending on the tickets’ value, frequency and surrounding circumstances, the benefit may potentially qualify as de minimis. High-value premium or courtside tickets may be more difficult to characterize as minimal, even when given only once.
Frequent individual use
Suppose the same employee receives two tickets to 15 games during the season.
Even though the employee does not receive the entire package, the frequency and total value may prevent the benefit from qualifying as de minimis. Some or all of the value may need to be included in taxable wages.
Transferring an entire season package
Suppose the business buys a season-ticket package and allows one executive to use the tickets personally throughout the season.
The package is generally not a de minimis benefit. Its fair market value may need to be included in the executive’s taxable compensation. Entertainment and sporting-event tickets are generally taxable fringe benefits unless a specific exclusion applies. (IRS)
When the value is properly treated as employee compensation and reported as wages, a separate deduction exception may apply to the employer. However, the business must address payroll reporting, income tax withholding and employment taxes. This is different from claiming the employee-recreation exception. (IRS)
7. Mixed-Use Packages Must Be Allocated Game by Game
Many businesses will use season tickets for more than one purpose. Some games may be employee events, some may involve clients, and others may be used by the owner.
The business should not place the entire purchase in one deductible entertainment account.
Instead, the cost should be divided based on actual usage.
Do not simply divide by the number of games without reviewing the package
Suppose a season package costs $24,600 and includes 41 regular-season games. Dividing the cost evenly would produce a cost of $600 per game.
That calculation may be reasonable when all games have the same assigned value. However, many ticket packages assign different values to different games. A premium matchup may have a much higher stated price than a less popular weekday game.
When available, the business should use:
- The team’s per-game allocation
- The invoice’s assigned ticket values
- The printed or electronic face value
- Another consistent and reasonable allocation method
Current IRS guidance requires a reasonable allocation when one expenditure includes deductible and nondeductible components. Although the IRS does not provide a special formula specifically for season-ticket packages, the business should choose a reasonable method, apply it consistently and retain supporting records. (IRS)
Example of a mixed-use package
Assume the business buys a $24,600 season package and the team provides a per-game value schedule.
At the end of the season, the ticket log shows:
- Employee recreation games with an allocated value of $10,200
- Client entertainment games with an allocated value of $7,800
- Owner personal use with an allocated value of $4,200
- Tickets given directly to individual employees with an allocated value of $2,400
The potential treatment could be:
Employee recreation — $10,200: Potentially 100% deductible if the activities primarily benefited regular employees and met the nondiscrimination requirements.
Client entertainment — $7,800: Nondeductible.
Owner personal use — $4,200: Nondeductible and potentially treated as compensation or an owner distribution, depending on the facts and business structure.
Tickets given to employees — $2,400: Review for possible taxable fringe-benefit treatment based on value, frequency and how the tickets were distributed.
The company should not simply deduct the full $24,600 because the purchase was made in the business’s name.
8. Documentation Is What Protects the Deduction
A business claiming a 100% employee recreation deduction should be prepared to prove how the tickets were used.
Maintain a game-by-game log showing:
- Date and opposing team
- Number of tickets
- Cost allocated to that game
- Names of attendees or recipients
- Employee positions or departments
- Whether clients or other business contacts attended
- Purpose of the outing
- Whether the company sponsored and organized the activity
- Food and beverage charges
- Whether food was separately purchased or itemized
- Any owner or family use
- Any tickets included in employee taxable wages
The attached IRS FAQ recommends maintaining records identifying the person entertained, the business relationship, business purpose, date, time, place and cost. Although the document’s entertainment-deduction rules are outdated, those recordkeeping principles remain a useful starting point.
Businesses should also retain:
- The season-ticket contract
- Invoices and payment records
- Per-game pricing schedules
- Employee announcements
- Lottery or rotation records
- Event invitations
- Separate food and beverage receipts
- Payroll records for taxable ticket benefits
- The company’s written ticket policy
A calendar that merely says “staff used tickets” may not be enough. The records should demonstrate who benefited and why the event qualifies as an employee recreational activity.
A Practical Season-Ticket Policy
Before the season begins, consider creating a written policy addressing:
Business purpose: The company maintains tickets to provide employee recognition and recreational opportunities.
Eligibility: The program is broadly available to regular employees and does not favor executives or owners.
Selection: Employees are selected through a rotation, lottery or department schedule.
Client use: Games involving clients are separately identified and recorded as nondeductible entertainment.
Owner use: Personal use by owners is separately recorded and reported appropriately.
Employee taxation: Frequent or high-value individual benefits are reviewed for payroll reporting.
Documentation: The company maintains a game-by-game log and supporting receipts.
Food and beverages: Meal charges must be purchased separately or separately stated.
A written policy will not create a deduction by itself, but it can help show that the business established a legitimate, consistently administered employee program.
The Final Buzzer
Sixers season tickets may provide a meaningful way to recognize employees, strengthen morale and create shared experiences—especially with LeBron coming to Philadelphia. His move to the 76ers was announced on July 24, 2026, creating even more attention around the upcoming season. (NBA.com)
But the tax rule is not:
“Buy the tickets through your business and deduct everything.”
The better rule is:
Allocate the package according to actual use. Qualifying employee recreation may be 100% deductible, client entertainment is generally nondeductible, and individual employee or owner use may create compensation or distribution issues.
A tax deduction also does not make the tickets free. A deduction reduces taxable income; it does not reimburse the business dollar for dollar.
Before purchasing a major package, business owners should review the proposed ticket policy, allocation method and payroll treatment with their tax professional.
This article provides general educational information and does not constitute individualized tax or legal advice. Tax treatment depends on the company’s entity structure, employees, ticket usage, documentation and surrounding facts.