Meals & Entertainment -- What's Deductible?

Many of the finer points of the Tax Cuts & Jobs Act are still being ironed out, with final clarification not expected until tax season begins late January 2019.

Thinking of writing off season tickets? With the new tax law, you might want to think again.

One of the favorite deductions for businesses, Meals & Entertainment, is undergoing some significant changes. Since the new tax law was introduced I have read many articles on this subject and they all read a little differently and there’s a lot of gray area.

The clearest way that I can explain the new law in regards to Meal & Entertainment is:

No deductions for anything to do with clients. That’s right, no meals, no entertainment, no box suites at the Superdome, nothing.

On the other hand, for employees, pretty much everything food-related can be deducted -- including parties, meals, snacks, social and recreational events and travel meals.

At a recent IRS Tax Forum I attended, a representative of the IRS said to a conference room of over 500 people, “ have an employee picnic everyday”, which drew laughter, which was then followed by, “I’m not joking.”

So, the short answer – if it is meals with employees, it’s deductible; with clients, it is not. If it’s entertainment with employees, some are deductible, i.e. softball games, picnics, etc.; entertainment for clients, no longer deductible. Obviously this is an oversimplification, but that is how the law reads (today). Stay tuned.