Meals & Entertainment Changes Under Tax Reform

Simplified Accounting for Small and Medium Business

July 31, 2018

Meals & Entertainment Expense Changes Under the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (TCJA) established additional limitations on the deductibility of certain business meals and entertainment expenses. Under the act, entertainment expenses incurred or paid after December 31, 2017 are nondeductible unless they fall under the specific exemptions in Code Section 274(e). For your convenience, we have provided a comprehensive chart to summarize proper treatment for many types of meals and entertainment expenditures, under the law applicable both before and after the act. To review the recent IRS guidance on Meals and Entertainment business expense deduction, see Notice 2018-76

EVENT	2017 EXPENSE	New 2018 EXPENSE
Client Business Meals	50% deductible if taxpayer is present, and not lavish or extravagant	50% deductible if business is conducted, taxpayer is present, and not lavish or extravagant
Transportation to/from Restaurant for Client Business Meal	100% deductible	100% deductible
Sporting Event Tickets	50% Deductible for face value of ticket (anything above face value is non-deductible 50% deductible for skybox expenses to the extent of non-luxury seat ticket face value in such box 100% deductible for charitable sports events Contributions for the right to purchase tickets to an educational institution's athletic events 80% deductible 50% for transportation to/from and parking at sporting events	No Deduction
Club Memberships	No deduction for club dues; however, 50% deduction for expenses incurred at a club organized for business, pleasure, recreation, or other social purposes if related to an active trade or business.	No Deduction
Meals Provided for the Convenience of the Employer	100% deductible provided they are excludible from employees' gross income as de minimis fringe benefits	50% deductible (nondeductible after 2025)
Meals Provided to Employees Occasionally and Overtime Employee Meals	100% deductible provided they are excludible from employees' gross income as de minimis fringe benefits	50% deductible (nondeductible after 2025)
Water, Coffee, and Snacks at the Office	100% deductible provided they are excludible from employees' gross income as de minimis fringe benefits	50% deductible (nondeductible after 2025)
Meals in Office During Meetings of Employees, Stockholders, Agents, or Directors	50% Deductible	50% Deductible
Meals During Business Travel	50% Deductible	50% Deductible
Meals at a Seminar or Conference, or at a Business League Event	50% Deductible	50% Deductible
Meals included in Charitable Sports Package	100% Deductible	50% Deductible
Meals Included as Taxable Compensation to Employee or Independent Contractor	100% Deductible	100% Deductible
Meals Expenses Sold to a Client or Customer (or Reimbursed)	100% Deductible	100% Deductible
Food Offered to the Public for Free (e.g., at a Seminar)	100% Deductible	100% Deductible
Office Holiday Party or Picnic	100% Deductible	100% Deductible

The Weaver Company CPA provides income tax, financial and accounting expertise for exclusive clients throughout the United States from our location in Redlands, California. We partner with select owners and decision makers of small to mid-sized business, as well as successful individuals.