The Tax Cuts and Jobs Act (TCJA) disallowed business deductions for entertainment, amusement, or recreation. Recently, the IRS has clarified that taxpayers may continue to deduct 50% of food and beverage expenses associated with their trade or business. Taxpayers will be able to take advantage of the "Business Meals" deduction if (1) the expense isordinary and necessary under IRC Sec. 162; (2) the expense is not lavish or extravagant; (3) the taxpayer, or an employee of the taxpayer, is present when the food or beverages is provided; (4) food or beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and (5) food or beverages are purchased separately from entertainment (or stated separately on one or more bills, invoices, or receipts). Taxpayers may rely on this guidance until proposed regulations are published by the IRS. For more information, contact one of our tax attorneys.
Article by Bonie S. Montalvo, Esq