What do the changes in Business Expense Deductions for Meals and Entertainment mean for your business?

The IRS has recently issued new guidelines for these deductions:

• Any expense related to activities generally considered entertainment, amusement or recreation have been eliminated and are no longer deductible.
• Businesses can continue to deduct 50% of the cost of business meals.  An employee or the taxpayer must be present and the food and beverages cannot be considered lavish
• The meals must be provided to a potential or current business customer, consultant, client or similar business contact.
• Food and beverages purchased during an entertainment event will not be considered entertainment if it is purchased separately.

The IRS expects to publish proposed regulations clarifying when business meals are deductible and what constitutes entertainment.

Stay tuned for further guidance on these issues!

Christine A. Murphy

Accounting Manager