TaxTips
Volume 8, Issue 11
For distribution 11/19/18; publication 11/21/18
Meals & Entertainment Changes Under Tax Reform
A lot has changed in the deductibility of meals and entertainment expenses. This chart will help you easily see the changes.
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Event
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2017 Expenses (Old rules)
|
2018 Expenses (New rules)
|
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Office Holiday Party or Picnic
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100% deductible
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100% deductible
|
|
Client Business Meals
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50% deductible if taxpayer is present, and not lavish or extravagant
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50% deductible if business is conducted, taxpayer is present, and not lavish or extravagant
|
|
Entertainment-Related Meals
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50% deductible
|
No deduction (e.g. meals incurred when no business is conducted, potentially at night clubs, cocktail lounges, theaters, country clubs, golf and athletic clubs, sporting events, and on hunting, fishing, vacation and similar trips)
|
|
Transportation To/From Restaurant for Client Business Meal
|
100% deductible
|
100% deductible
|
|
Sporting Event Tickets
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100% deductible for charitable sports events
Contributions for the right to purchase tickets to an educational institution’s athletic events 80% deductible
50% for transportation to/from and parking at sporting events
|
No deduction
No deduction
No deduction
|
|
Club Memberships
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No deduction for club dues; however, 50% deduction for expenses incurred at a club organized for business, pleasure, recreation, or other social purposes if related to an active trade or business
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No deduction
|
|
Meals Provided for The Convenience of Employer
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100% deductible provided they are excludible from employees’ gross income as de minimis fringe benefits under §119(a); otherwise 50% deductible
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50% deductible
(nondeductible after 2025)
|
|
Meals Provided to Employees Occasionally and Overtime Employee Meals
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100% deductible provided they are excludible from employees’ gross income as de minimis fringe benefits under §132(e)(1); otherwise 50% deductible
|
50% deductible
(nondeductible after 2025)
|
|
Water, Coffee, And Snacks at The Office
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100% deductible provided they are excludible from employees’ gross income as de minimis fringe benefits under §132(e)(1); otherwise 50% deductible
|
50% deductible
(nondeductible after 2025)
|
|
Meals in Office During Meetings of Employees, Stockholders, Agents, Or Directors
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50% deductible
|
50% deductible
|
|
Meals During Business Travels
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50% deductible
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50% deductible
|
|
Meals at A Seminar or Conference, Or at A Business League Event
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50% deductible
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50% deductible
|
|
Meals Included in Charitable Sports Package
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100% deductible
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50% deductible (the exception provided under former §274(n)(2)(C), referring to former §274(l)(1)(B), was repealed)
|
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Meals Sold to A Client or Customer (Or Reimbursed)
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100% deductible
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100% deductible
|
|
Food Offered to The Public for Free (e.g., At A Seminar)
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100% deductible
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100% deductible
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You might want to ask your bookkeeper to start breaking out these amounts so that the information will be available for tax season. We can help you determine how to categorize your expenses to line up with the tax requirements.
And if you have questions about any of this, feel free to reach out any time.
***
Tweets
Insert a link to your newsletter, web site or blog before you post these:
Our latest blog: Meals & Entertainment Changes Under Tax Reform Subscribe here: [link]
Curious about how the new tax reform affects your business’s deductions for meal and entertainment expenses? Find out more: [link]
Tax Tip: Under the new tax reform, all sporting event ticket expenses are nondeductible. [link]
Water, coffee and snacks at your office are only 50% deductible under the new tax reform, compared to 100% in 2017. [link]
Entertainment-related meal expenses are nondeductible under the new tax reform for 2018. [link]
The new tax reform provides stricter limitations on the deductibility of business meals and entertainment expenses. Find out more here: [link]
Want to know if your business entertainment expenses are still deductible? Find out here: [link]
Meals & Entertainment Changes Under Tax Reform Sign up for our newsletter: [link]
