The Tax Cuts and Jobs Act eliminated the deduction for business entertainment expenses, as well as for meals related to business entertainment – such as the expense of a hot dog at a baseball game, or lunch at the golf course.
Prior to the TCJA, business meals and entertainment were both deductible – but limited to 50% of the total cost.
Now, the TCJA spells out, “No deduction otherwise allowable under this chapter shall be allowed for any item … with respect to an activity which is of a type generally considered to constitute entertainment.”
This means that giving away sporting event tickets to clients would not be deductible as a promotion, for example.
In a related change, meals for the convenience of the employer – which were previously deductible at 100% – are now limited to 50% deductible.
Business owners will, however, still be able to deduct the full 100% cost of office parties.
Someone might ask, for example, if I go to a Mexican restaurant that has mariachis, is that entertainment or a meal? Or, if I go to a comedy show that has a dinner included in the price of the ticket, how would that be treated? The need for a reliable CPA to help you navigate these questions is greater than ever.
Bio: Corry Hunter, CPA, joined Osborne Rincon CPAs in January 2011 and was recently promoted as Tax Manager in January of 2018. His specialties include income tax, foreign income tax, estates and trusts and accounting information systems and software functionality.
Contact: For more information call Osborne Rincon CPAs at 760-777-9805 or www.OsborneRincon.com
Last modified: June 11, 2018