2018 Tax Act: Business Taxes- Entertainment

This allowance of certain entertainment expenses has been amended as a result of this tax act.  No deduction is allowed for entertainment, amusement, or recreation.  Membership fees for clubs, organized for business, pleasure, recreation, or other social purposes. 

The AICPA has requested the IRS for clarification on what is deemed deductible.  Meals are currently going to be deductible at a 50% rate, as in the past.  However, other entertainment expenses will not be deemed deductible under the new rules.  This would eliminate sporting tickets, concerts, and other items that we are used to deducting.  So, basically, the exception to the deduction allowance for entertainment, amusement, or recreation that is directly related to our business activity is repealed. 

The employer deductions for expenses associated with meals provided for the employer's convenience on or near the employer's business premises through an employee-operated facility is repealed. 

The deduction from 50% of food and beverage expenses associated with operating a trade of businesses is retained.  The 50% limit is expanded to include employer expenses associated with providing food and beverage to employees through an eating facility, meeting the de minimis fringe requirements.