IRS Issues Guidance on Meals and Entertainment
October 4, 2018
Since the Tax Cuts & Jobs Act was passed in late 2017, there has been much discussion about the deductibility of business entertainment expenses. While the TCJA eliminated deductions for business expenses related to entertainment, amusement and recreation activities, one key provision was left in place: businesses are still allowed to deduct 50% of the cost of food and beverages provided during or at entertainment events, if purchased separately from the entertainment or if the cost is stated separately from the cost of the entertainment. In addition, the Act did not eliminate the general 50% deductibility of food and beverage expenses associated with operating a trade or business. Specific tests must be met to maintain deductibility. Those tests include:
For example, a taxpayer purchases a block of tickets for business contacts to attend a sporting event. Deductibility scenarios are:
Clarification is on the Horizon
The IRS has stated that it will published proposed regulations to clarify deductibility of business meal expenses. Until that time, these general guidelines should be followed. If you have any questions, please contact Mark Abrams, Tax Partner with Smith & Howard at 404-874-6244 or fill out the contact form below.
If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.CONTACT AN ADVISOR
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