Tax Reform – Meals & Entertainment
With the changes in the new tax law, there is quite a bit of uncertainty regarding the deductibility of meals and entertainment.
We hope the chart below will provide you with some guidance as to how these expenses should be treated. For tax purposes we recommend that expenses be recorded into the following general ledger accounts:
- Non deductible meals
- 100% deductible meals
- 50% deductible meals
- Entertainment
| Description | 2017 Expenses (Old Rules) | 2018 Expenses (New Rules) |
| Meal with client & business discussed | 50% Deductible | 50% Deductible |
| Meal with client & No business discussed | 0% Deductible | 0% Deductible |
| Attending a sporting event, concert, play | 50% Deductible | 0% Deductible |
| Golfing with a client/customer | 50% Deductible | 0% Deductible |
| Attending a nightclub or social club | 50% Deductible | 0% Deductible |
| Rental of Entertainment facility, such as hunting lodge, hotel suites, home in vacation resort | 0% Deductible | 0% Deductible |
| Club Membership & Dues | 0% Deductible | 0% Deductible |
| Employee meals while away from home on business | 50% Deductible | 50% Deductible |
| Office Holiday Party, Picnics | 100% Deductible | 100% Deductible |
| Bagels, pizza, lunch for staff meetings | 100% Deductible | 50% Deductible |
| Meals provided to employees for the convenience of Employer through an eating facility (cafeteria) | 100% Deductible | 50% Deductible |
Please note that the IRS has not yet issued Regulations on the changes made by the Tax Reform Act.
Future Regulations will provide guidance on interpreting the application of the New Rules.
If you have questions on this, please give us a call.
