The Internal Revenue Service issued guidance on tax deductions for meal and entertainment business expenses under the Tax Cuts and Jobs Act.

The TCJA was set to eliminate deductions for any expense related to entertainment, amusement or recreation. However, it did not specifically address the deductibility regarding business meal expenses.

The IRS now states:

• Taxpayers can still deduct 50% of the cost of meals if the taxpayer or employee of the business is present at the meal and the food is not considered “extravagant or lavish”
  • The meals can be provided to current or potential clients and business contacts
• Food and beverages provided during entertainment events will not be considered entertainment if they are purchased separately from the event.

The IRS and Treasury Department plan to release regulations that clarify the which expenses are deductible and what constitutes as entertainment. Until these regulations are effective, taxpayers can rely on Notice 2018-76 for guidance.

If you have questions regarding this tax deduction or would like further guidance, we urge you to contact your DDK Tax Advisor.