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.
|
Description |
2017 | 2018 |
| 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) |
No Deduction |
|
50% deductible for skybox expenses to the extent of non-luxury seat ticket face value in such box |
No Deduction | |
|
100% deductible for charitable sports events |
No Deduction | |
|
Contributions for the right to purchase tickets to an educational institution's athletic events 80% deductible |
No Deduction | |
|
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 excludable from employees ' gross income as de minimis fringe benefits; otherwise 50% deductible |
50% deductible (nondeductible after 2025) |
|
Meals Provided to Employees Occasionally and Overtime Employee Meals |
100% deductible provided they are excludable 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 excludable from employees' gross income as de minimis fringe benefits | 50% deductible (nondeductible after 2025) |
| Meals in Office During Meetings of Employees, Stockholders, Agents, or Directiors | 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 | 100% 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 |