2023 Tax Calendar
VIEWpoint Issue 2 | 2022
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Q. Even though entertainment expenses are no longer deductible, does the food and beverage expenses incurred while entertaining customers remain 50 percent deductible?
In short, yes. After much uncertainty surrounding this time-honored, and legitimate business practice of “wining and dining” customers, the Internal Revenue Service provided some much-needed guidance on the new post-tax reform regulations.
Although the Tax Cuts and Jobs Act eliminated the deduction for entertainment expenses, food and beverages purchased while entertaining clients continue to be 50 percent deductible under the longstanding requirements. There is a catch – they do have to be purchased separately or stated separately on the bill, invoice or receipt.
For example, if you take a customer to a ball game and purchase tickets in a suite where food and beverages are provided, 50 percent of the food and beverage costs are deductible if stated separately on the bill, invoice or receipt, while the rest of the ticket cost is a nondeductible entertainment expense.
It’s important to remember that the longstanding rules for entertainment-related meals continue to apply—namely, to be 50 percent deductible. In order to qualify for the deduction, the below must be true:
For more information on meal and entertainment deductions, contact our tax advisors today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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