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Meals and Entertainment Changes Under Tax Reform

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Meals and Entertainment Changes Under Tax Reform

Meals & Entertainment Expense Changes Under the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA) established additional limitations on the deductibility of certain business meals and entertainment expenses.  Under the act, entertainment expenses incurred or paid after December 31, 2017 are nondeductible unless they fall under the specific exemptions in Code Section 274(e).  For your convenience, we have provided a comprehensive chart to summarize proper treatment for many types of meals and entertainment expenditures, under the law applicable both before and after the act.  To review the recent IRS guidance on Meals and Entertainment business expense deduction, see Notice 2018-76.

Event  2017 Expenses New 2018 Expenses
Client Business Meals 50% deductible if taxpayer is present, and not lavish or extravagant 50% deductible if business is conducted, taxpayer is present, and not lavish or extravagant
Transportation to/from Restaurant for Client Business Meal 100% deductible 100% deductible
Sporting Event Tickets 50% Deductible for face value of ticket (anything above face value is non-deductible

50% deductible for skybox expenses to the extent of non-luxury seat ticket face value in such box

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
Club Memberships 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. No Deduction
Meals Provided for the Convenience of the Employer 100% deductible provided they are excludable from employees' gross income as de minimis fringe benefits; otherwise 50% deductible 50% deductible (nondeductible after 2025)
Meals Provided to Employees Occasionally and Overtime Employee Meals 100% deductible provided they are excludable from employees' gross income as de minimis fringe benefits 50% deductible (nondeductible after 2025)
Water, Coffee, and Snacks at the Office 100% deductible provided they are excludable from employees' gross income as de minimis fringe benefits 50% deductible (nondeductible after 2025)
Meals in Office During Meetings of Employees, Stockholders, Agents, or Directors 50% deductible 50% deductible
Meals During Business Travel 50% deductible 50% deductible
Meals at a Seminar or Conference, or at a Business League Event 50% deductible 50% deductible
Meals included in Charitable Sports Package 100% deductible 50% deductible
Meals Included as Taxable Compensation to Employee or Independent Contractor 100% deductible 100% deductible
Meals Expenses Sold to a Client or Customer (or Reimbursed) 100% deductible 100% deductible
Food Offered to the Public for Free (e.g., at a Seminar) 100% deductible 100% deductible
Office Holiday Party or Picnic 100% deductible 100% deductible

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