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THURSDAY TAX TIDBITS


Tax Law Changes: Meals and Entertainment 

Under the Trump Administration, the new tax Act creates stricter limits on the deductibility of business meals and entertainment expenses. As a business owner, you can still deduct your meals, but no longer entertainment. For example, if you take your team to a baseball game, you can write-off the hot dog, but not the game. Entertainment expenses incurred or paid after December 31, 2017 are nondeductible unless they fall under the specific exceptions in Code Section 274(e). One of those exceptions is for “expenses for recreation, social, or similar activities primarily for the benefit of the taxpayer’s employees, other than highly compensated employees”. (i.e. office holiday parties are still deductible). Business meals provided for the convenience of the employer are now only 50% deductible whereas before the Act they were fully deductible. After 2025, those meals will be nondeductible.


These new rules should be kept in mind as businesses plan their 2018 meals and entertainment budgets. See below for a chart comparing the rules before and after the Act.


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