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IRS Guidance on the Business Expense Deductions for Meals and Entertainment

On September 30, 2020, the IRS issued final regulations providing guidance on the business expense deductions for meals and entertainment under Section 274 of the Internal Revenue Code in light of changes made by the Tax Cuts and Jobs Act (the ?Ç£TCJA?Ç¥). The TCJA eliminated most deductions for business expenses related to entertainment, amusement, or recreational activities, but allowed taxpayers to continue to deduct certain business expenses for food and beverages, as we discussed in our prior blog post here. The final regulations (i) address the elimination of the deduction for most entertainment, amusement, or recreational activity expenses; (ii) provide guidance on what constitutes entertainment for such purposes; and (iii) address the limitation on the deduction for meal expenses. The final regulations will be effective on the date of their publication in the Federal Register, which is scheduled for October 9, 2020. Taxpayers who pay or incur business expenses for… Continue Reading

IRS Guidance Regarding Deductibility of Business Meal Expenses

The Tax Cuts and Jobs Act (the ?Ç£Tax Act?Ç¥), passed at the end of last year, revised Section 274 of the Internal Revenue Code to generally disallow a deduction for expenses with respect to entertainment, amusement, or recreation. However, the Tax Act does not specifically address the deductibility of expenses for business meals. The IRS intends to publish proposed regulations clarifying when business meal expenses are nondeductible entertainment expenses and when they are 50 percent deductible expenses. Until the proposed regulations are effective, a taxpayer can rely on the transitional guidance in IRS Notice 2018-76 to determine whether the taxpayer can deduct 50 percent of a business meal expense. View the IRS Notice 2018-76.

September 2022