Live entertainment deductible?

An Arthur Murray franchise owner provides digital and live musical entertainment for customers in the ordinary course of doing business. The core of her business is to provide dance instruction. My default is that entertainment is not deductible. However, these expenses are not "entertainment" per se. They are incurred in conjunction with dance instruction. Are these entertainment expenses deductible?

They are in the business of selling dance instructions. A night club is in the business of selling booze, food and, often, entertainment of various kinds. A professional sports team sells entertainment. A movie theater sells entertainment, as does a live show theater. They sell entertainment, sometimes, as in your example, as a mere incident to selling a different service.

I haven't looked, but aren't the rules that disallow entertainment expenses directed at provision of entertainment as a means of selling something else, like maybe widgets?

Now I've looked, and even if 274 applies (I guess it does technically), it's clear that it meets the exception of being directly related to the taxpayer's trade or business.

Now I've really looked. Reg. 1.274-2(f)

(ix)Entertainment sold to customers. Any expenditure by a taxpayer for entertainment (or for use of a facility in connection therewith) to the extent the entertainment is sold to customers in a bona fide transaction for an adequate and full consideration in money or money's worth is not subject to the limitations on allowability of deductions provided for in paragraphs (a) through (e) of this section. Thus, the cost of producing night club entertainment (such as salaries paid to employees of night clubs and amounts paid to performers) for sale to customers or the cost of operating a pleasure cruise ship as a business will come within this exception.

If clients are learning to dance, do they not generally need some music to dance to? Is that "entertainment"?

Is the "musak" the grocery store plays while you're shopping considered "entertainment"?

So what exactly is meant when Arthur "provides digital and live musical entertainment for customers"?

Based on OP, Arthur's music, used to instruct them, also entertains them. Likely true, with exceptions.

Are there really grocery stores that provide music to shop to?

Why else do people dance down the aisles?

Additional information since original post.
In the normal course of their operation, they provide digital (recorded) music for instruction. In June, they opened a new location and provided live music to give the customers and prospects a little something extra to promote AM services. Based on these circumstances, the live music sounds a little more like entertainment.

Or marketing.

I'm not sure what's wrong with providing live music, many bars do that. But providing live music could also mean giving someone brittany spears tickets.

If they provided live intertainment at their location and was open to the public that too is another exception.

EAglescoutjb, you seem intent on looking to not deduct the "entertainment". Why?

Additional information since original post.
In the normal course of their operation, they provide digital (recorded) music for instruction. In June, they opened a new location and provided live music to give the customers and prospects a little something extra to promote AM services. Based on these circumstances, the live music sounds a little more like entertainment.

Are you saying they host an event (separate from classes) where they have live music and dancing, in order to entice people to sign up for classes? (maybe there's a question about it being nondeductible) Or, what I think is probable, that they provide live music during the classes where they're teaching dance, in lieu of dancing to recorded music?

The point of the live music isn't to "entertain" the students, it's to provide a more polished/professional atmosphere for the dancing. Just like you could have a really crappy sound system, or upgrade to a very nice sound system, this is another step of upgrade for the best experience while you're dancing. I've taken ballet lessons at a studio with a live pianist, it's to give the highest quality experience, that's in keeping with traditional ballet methods, not to enjoy piano music while you happen to also be doing ballet.

EAglescoutjb, you seem intent on looking to not deduct the "entertainment". Why?

Hardly. He/she asked the question in the first place as to whether it should be allowed, and then provided a little additional info. Where do you see "intent to not deduct" in the two posts made? But, you know, maybe the client has transgressions that give rise to moral indignation on the part of the preparer, who now wants to use the tax system to impose additional punishment that the civil and criminal justice systems have failed to provide.

If there are factual details involved in this one similar to those I know of in the other one to which you not so subtly allude, I'd use the tax law (properly and unapologetically) to do just that.

§ 10.29 Conflicting interests.
(a) Except as provided by paragraph (b) of this section, a practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest. A conflict of interest exists if —
(1) The representation of one client will be directly adverse to another client; or
(2) There is a significant risk that the representation of one or more clients will be materially limited by the practitioner’s responsibilities to another client, a former client or a third person, or by a personal interest of the practitioner.

I have no clients.

I read your comment "I'd use the tax law (properly and unapologetically) to do just that" as a suggestion to the OP; that is, you would do just that if you were in the OP's position. Your comment does come on the heels of makbo's after all, who (jokingly, I think) alluded to the OP behaving in that way.

Now, I wonder what the rules are that govern the impartiality of IRS revenue agents? The goal of these agents, after all, is to vigorously enforce tax laws. If Nilodop were a revenue agent, would his bias endanger his position?

Somewhere my meaning has gone off track. I'll assume I've been vague or subtle, so my fault. Not important to this discussion.

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