clear business setting test

A test conducted to determine the deductibility of business expenses related to entertainment and dining. The test requires that no other motive is involved in the incurrence of these expenses other than to further the interest of the business. Eligible expenses can include any entertainment or dining expenses related to the generation of a company's publicity, price rebates for restaurant or hotel customers, and the expense of renting a display area at a convention. Conditions include the taxpayer being physically present at the event and there also may not be other distractions occurring including at a sporting event or other such activities. If associates and personal acquaintance are present at the event, expenses are typically considered to be non-deductible.