Wink Inc. Enrolled Agents America’s Tax Experts ®
Wink Tax Services

2018 New Tax Law Severely Limits Entertainment Deductions

Highlights:

Business Entertainment Expenses

Business Meals

Directly Related To Test

Associated With Test

Employee Meals

Note: This is one of a series of articles explaining how the various tax changes in the GOP’s Tax Cuts & Jobs Act (referred to as “the

Act” in this article), which passed in late December 2017, could affect you, your business or your family, in both 2018 and future

years. This series offers strategies that you can employ to reduce your tax liability under the new law.

If you are a business owner who is accustomed to treating clients to sporting events, golf getaways, concerts and the like, we have

some bad news for you. The GOP’s tax-reform bill that President Trump signed on December 22nd of last year eliminated the

business-related deduction for entertainment, amusement or recreation expenses, effective beginning in 2018.

This doesn’t mean you can’t still entertain your clients; it just means you can no longer deduct 50% of the cost of that

entertainment as a business expense, making it more costly for you to entertain clients.

But all is not lost! The Act does retain a deduction for business meals that are directly related to or associated with the active

conduct of your business. The term “directly related” means that actual business discussions were conducted during the meal and

you anticipated a specific business benefit from the meal. The term “associated with” is more liberal and includes meals either

preceding or following a bona fide business discussion. In either case, the business deduction continues to be 50% of the actual

expense. Also remember that business meals must be documented, including the amount, business purpose, date, time, place and

names of the guests as well as their business relationship with you.

That's not all! In the past, employers have been accustomed to deducting 100% of the cost of food and beverages provided to

employees at or near the place of business. That too has changed, and the Act now subjects food and beverages supplied to

employees to the 50% limitation. But that deduction is only allowed through 2025. As of 2026, employers’ costs for food and

beverages furnished to employees will not be deductible.

Meals while traveling out of town on business continue to be deductible and are also subject to the 50% limitation.

If you have questions related to entertainment and meal expenses, please give this office a call.

Wink Inc. | Enrolled Agents | 2701 Troy Center Dr, Ste 255 | Troy | Michigan | 48084 | Tel: 248-816-1220 | 800-276-8319 | Text: 248-800-6013|
Wink Inc. Enrolled Agents America’s Tax Experts ®
Wink Tax Services

2018 New Tax Law Severely Limits

Entertainment Deductions

Highlights:

Business Entertainment Expenses

Business Meals

Directly Related To Test

Associated With Test

Employee Meals

Note: This is one of a series of articles explaining how the various tax

changes in the GOP’s Tax Cuts & Jobs Act (referred to as “the Act” in

this article), which passed in late December 2017, could affect you,

your business or your family, in both 2018 and future years. This series

offers strategies that you can employ to reduce your tax liability under

the new law.

If you are a business owner who is accustomed to treating clients to

sporting events, golf getaways, concerts and the like, we have some

bad news for you. The GOP’s tax-reform bill that President Trump

signed on December 22nd of last year eliminated the business-related

deduction for entertainment, amusement or recreation expenses,

effective beginning in 2018.

This doesn’t mean you can’t still entertain your clients; it just means

you can no longer deduct 50% of the cost of that entertainment as a

business expense, making it more costly for you to entertain clients.

But all is not lost! The Act does retain a deduction for business meals

that are directly related to or associated with the active conduct of your

business. The term “directly related” means that actual business

discussions were conducted during the meal and you anticipated a

specific business benefit from the meal. The term “associated with” is

more liberal and includes meals either preceding or following a bona

fide business discussion. In either case, the business deduction

continues to be 50% of the actual expense. Also remember that

business meals must be documented, including the amount, business

purpose, date, time, place and names of the guests as well as their

business relationship with you.

That's not all! In the past, employers have been accustomed to

deducting 100% of the cost of food and beverages provided to

employees at or near the place of business. That too has changed, and

the Act now subjects food and beverages supplied to employees to the

50% limitation. But that deduction is only allowed through 2025. As of

2026, employers’ costs for food and beverages furnished to employees

will not be deductible.

Meals while traveling out of town on business continue to be deductible

and are also subject to the 50% limitation.

If you have questions related to entertainment and meal expenses,

please give this office a call.

Wink Inc. Enrolled Agents | 2701 Troy Center Dr, Ste 255 | Troy | Michigan | 48084 | Tel: 248-816-1220 | TF: 800-276-8319 | Text: 248-800-6013 |