ENTERTAINMENT AND MEALS 1118

ENTERTAINMENT AND MEALS

This is of great importance to those who either own small businesses or whose active conduct of their business requires entertaining clients.  The Tax Act of 2018 completely disallows any deduction for entertainment and now indicates that meals must be otherwise deductible.  Because entertainment has been repealed altogether, a deduction for meals that are entertainment related are not deductible at all. It is now necessary to determine whether meals are nondeductible entertainment related or deducible client business meals. It is important to refrain from incurring client business meals in settings that are considered entertainment such as nightclubs, cocktail lounges, theaters country clubs, golf and other sporting events or on fishing hunting or other vacation type trips.

It is important to keep a log of date, who you ate with and where, and the business discussed at that meal.

Meals that remain deductible, are limited to 50% of the cost. Deductible meals are limited as follows;

1. For business meetings and office meetings of employees, directors or stock holders if there is a business function to the meal
2. During business travel, if they are not considered personal and there is a business function to the meal
3. Attending a seminar or convention even if the meals are not separately stated (calculated using reasonable method or per diem rates for the area)