Prior to the signing of the new Tax Cut and Job Act bill into law, individuals could deduct about 50% of business-related meals and entertainment expenses. Also, the previous law allowed for more deductions to be made in certain circumstances.

Deductions for most Entertainment Expenses are disallowed

The TCJA disallows the deductions for common business related entertainment expenses for amounts paid after 31st December 2017. TCJA disallows deductions for the cost of facilities and equipments used for entertainment activities. Under the new law, there is a list of activities and expenses that the deduction is restricted to, some of them include; purchase of sporting events ticket, stadium and license fee for seating rights, theatre tickets, golf club dues, company golf outing for clients, hunting and sailing outings etc. While this deductions are Disallowed, some business entertainment related expenses are still deductible, you want to know how? Simply contact us now!

What Deductions are still allowed for Food and Beverage Expenses

Under the TCJA business related meals deduction has not changed, also, the time honored rule to confirm if truly a meal is business related still apply. Under certain exceptions food and beverages are still 100% deductible. It is not confirmed at this time though, but it appears that business owners can still deduct 50% for food and beverage expenses that are gained at an entertainment event; this is on the condition that business must have taken place, before, after or during the entertainment event. These rules outlined in the TCJA at times can be a little confusing, that is why IRS guidance is advised. Contact us today.

Conclusion

As a business owner, it is wise to critically assess your current allowance policies to see if the deemed unfavorable provisions in the new TCJA warrant changes. It is wise to also track separately employee’s entertainment expenses and business related meal expenses which are still 50% deductible under the TCJA.

The new tax laws for business related entertainment and meal expenses are a little bit complicated, but as a team we can help you and your business plan ahead in order for your business to get the best treatment from the new law. Also, if you have other questions, do well to contact us.