Tax reform – Business Meals and Entertainment deductions that survived the cut

Tax reform – Business Meals and Entertainment deductions that survived the cut 150 150 Pauleen Miller

Bad news: The tax reform wiped out the business –entertainment deductions. Which means you can no longer deduct business related entertainment expenses like business meals, dinner with clients, taking a client to a ballgame, etc. These entertainment expenses are completely nondeductible, regardless of whether they are directly related to or associated with the taxpayer’s business

Now the good news: Code Sec. 274(e) which is still intact! This code section provides an exemption to the new rules. It says that  you can still deduct employee meals for business meetings and food and beverages for employees. Meals that were 100% deductible when they were provided for the convenience of the employer are now only 50% deductible.

The following chart shows the comparison between the old and new laws:

Business Meals & Entertainment Expenses
2017 Rules (Old Rules) 2018 New Rules
Office Holiday
Parties
100% Deductible 100% Deductible
Meals Business Meals – 50% Business Meals – 50%
Entertaining Clients Tickets for events 50% deductible (face value)
/ qualified charitable events 100% deductible
No Deduction
Meals provided for the
convenience of the Employer
100% deductible if excluded from employees income
– otherwise 50% deductible
50% deductible until 2025 then
non deductible