Updates to Tax Law and 52 Weeks to Prosperity

CLARIFICATION ON DEDUCTIBILITY OF BUSINESS MEALS PER TCJA

October 2018

Originally, the Tax Cuts and Jobs Act indicated that neither business meals nor entertainment expenses could be deducted by taxpayers. However, the IRS issued clarification in October that business meals were still deductible at the 50% level provided they were not lavish or extravagant. The meals can be provided to current or potential business customers, clients, consultants, or similar business contacts.

Entertainment expenses continue not to be deductible. If a meal is served at an entertainment event, the costs must be calculated separately for the meal to be deductible. For example, if a company sponsored an event that was a baseball game with hot dogs, Cracker Jacks, peanuts, and beer, for the company to deduct fifty percent of the food cost, the ball park would need to issue two invoices–one for the cost of the tickets and one for the cost of the hot dogs and trimmings.

For more information, check out the IRS clarification found on

https://www.irs.gov/newsroom/irs-issues-guidance-on-tax-cuts-and-jobs-act-changes-on-business-expense-deductions-for-meals-entertainment