The Tax Cuts and Jobs Act brought many changes to the deductibility of meals and entertainment. These changes included the complete disallowance of entertainment related expenses and the reduction of the amount deductible related to employer operated eating facilities to 50 percent of the related expenses. Left unanswered was whether or not businesses could continue deducting 50 percent of the costs of business meals. Were meals while at a ballgame considered part of the entertainment cost, thus becoming completely non-deductible or would the meals be considered separately and remain 50 percent deductible?
Today, the IRS issued favorable guidance that will allow businesses to continue deducting 50 percent of business related meals if the following five conditions are met:
Businesses using an entertainment facility or having all-inclusive tickets should ensure that the price of the food is separately stated on the invoice for the activity to maintain 50 percent deductibility of the food. Without the amounts for the food being separately stated, the entire cost, including the cost of the food will be non-deductible.
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