This week we will continue to review some of the changes from the Tax Cuts and Jobs Act (TCJA) passed last December.
Prior to 2018, a business could deduct up to 50 percent of entertainment expenses directly related to the active conduct of a trade or business. This also applied if the entertainment incurred immediately before or after a bona fide business discussion, associated with the active conduct of a trade or business.
The TCJA eliminated the deduction for all expenses related to activities generally considered entertainment, amusement or recreation.
Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant.
Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.
Disclaimer: The items included in the Tax Tip Tuesday Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.