That's right...the Tax Cuts and Jobs Act of 2017 eliminated the deductions for all client entertainment and modified many of the deductions for meals. While these are legitimate expenses for many businesses, they have long been a target of IRS audits.
What is still deductible? The occasional office holiday party or summer picnic that includes all employees is still fully deductible. The quiet client business meal that includes the client and a taxpayer while discussing business matters continues to be a 50 percent deductible expense. And meals provided for the convenience of the employer or during business travel is now a 50 percent deductible expense.
Gone are all expenses incurred at sporting events, theaters, country clubs and such. However, many professionals are expecting Congress and the IRS to revisit these policies before year end...so stay tuned!
Businesses should review their accounting policies as soon as possible to verify that these expenses are properly recorded and available for review for tax reporting. Please contact our office for suggestions on how to ease into these new reporting requirements.