A Notice from the IRS (Notice 2018-76) has been released that gives transitional guidance on the deductibility of certain business meals under Section 274, as amended by The Tax Cuts and Jobs Act. The IRS intends to publish proposed regulations under Section 274. Until these proposed regulations are issued, this Notice should be relied on regarding business meals.
The new Tax Law repealed the directly related entertainment expenses under Section 274 so they are no longer deductible. Entertainment means any activity which constitutes entertainment, amusement, or recreation such as entertaining at a night club or a sporting event.
Under the Notice, taxpayers may deduct 50 percent of a business meal if:
1. The expense is ordinary and necessary
2. The expense is not lavish or extravagant
3. The taxpayer or an employee are present
4. The food and beverage are provided to a current or potential client or customer
Be careful when paying for business meals so they meet these guidelines. Please call our office if you have questions!