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Comparative Analysis of Entertainment Expense in the United States and Korea

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Authors
Kim, Jaeseung
Issue Date
2011
Publisher
BK 21 law
Citation
Journal of Korean Law, Vol.11 No.2, pp. 151-178
Keywords
business expenseentertainment expensesubstantiationbusiness giftdirectly relatedassociated withordinary expense
Abstract
This article provides preliminary guidelines for researchers and investors who are interested in Korean tax law in the area of entertainments expenses via comparative analysis of tax laws in the United States and Korea. Unlike the U.S., Korea regulates entertainment expenses only by placing a ceiling on the deductible amount, not by imposing stricter conditions for a business deduction. In the U.S. 50 percent of any entertainment expense otherwise deductible is allowed. Korea places a ceiling on otherwise deductible entertainment expenses according to a mathematical formula. To determine which expenses qualify as entertainment expenses, Korean courts or administrative agencies apply a comparative analysis with other expenses. Under American tax law for a business deduction an entertainment expense at least should be associated with the active conduct of the taxpayer’ trade or business. For a business deduction a taxpayer must substantiate entertainment expenses by evidence or documents as prescribed in the relevant provisions in the U.S. and Korea.
ISSN
1598-1681
Language
English
URI
http://hdl.handle.net/10371/85185
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College of Law/Law School (법과대학/대학원)The Law Research Institute (법학연구소) Journal of Korean LawJournal of Korean Law Volume 11 Number 1/2 (2011)
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