2018 Meals & Entertainment Expenses
Here is a list of changes provided by Trump’s Tax Cuts and Jobs Act related to 2018 Meals & Entertainment Expenses:
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- COST OF INCIDENTAL FOOD, DRINKS AND REFRESHMENTS PROVIDED AS HOSPITALITY ITEMS DURING AN EVENT TO PROMOTE THE SALE OF PRODUCTS OR SERVICES WHERE NO ENTERTAINMENT IS PROVIDED. Depending on the circumstances and who is invited, these costs may be fully deductible or subject to the 50 percent limitation. These type promotional events should also be reviewed for the potential to be considered as advertising. Also, particular care should be given to the invitation so that the incidental food and drinks are not “showcased” thus providing any potential to be considered as entertainment. Further guidance anticipated.
- COST OF TAKING A CUSTOMER OR CLIENT GOLFING OR TO THE THEATER OR A BALL GAME. The act generally denies a deduction for entertainment after 2017, so this cost will typically be non-deductible.
- COST OF A PACKAGE THAT INCLUDES A TICKET TO A CHARITABLE SPORTING EVENT. This cost will be considered entertainment and non-deductible after 2017. (Note: Any charitable donation portion will continue to be deductible.)
- COST OF DINNER WITH A CUSTOMER OR CLIENT PRIOR TO, OR AFTER, ENTERTAINMENT. Depending on the facts, this cost may be non-deductible (as a part of the outing for entertainment). If there is a separate business purpose, clearly separate from the entertainment, for the dinner, and the meal cost is not lavish or extravagant, 50 percent of the meal cost should be deductible. Documentation of the business purpose of the meal is critical for deductibility. Further guidance anticipated.
- COST OF SNACKS AND REFRESHMENTS PURCHASED DURING A SPORTING EVENT. Even though these items might be considered in the nature of meals, they are associated with the event entertainment and likely non-deductible. Further guidance anticipated.
- COST OF OCCASIONAL HOLIDAY PARTIES AND PICNICS FOR ALL TEAM MEMBERS. The treatment of these costs is not affected by the act; the costs should continue to be fully deductible.
- COST OF DEPARTMENTAL GATHERINGS AND OUTINGS INCLUDING REFRESHMENTS. Depending on the circumstances, these costs may be fully deductible as long as the activities primarily benefit team members other than those who are highly compensated.
- COST OF MEALS INCURRED BY TEAM MEMBERS FOR BUSINESS LUNCHEONS OR WHILE TRAVELING ON COMPANY BUSINESS. As long as the expense is not lavish or extravagant, a deduction should be available, but now limited to 50 percent of the cost. Further guidance anticipated.
- COST OF MEALS INCURRED BY TEAM MEMBERS WHILE ATTENDING A MEETING OF A SERVICE CLUB (SUCH AS ROTARY, OPTIMISTS, KIWANIS, ETC). As with business luncheons noted above, a deduction for the meal cost should be available subject to the 50 percent limitation. However, the cost of dues for membership in service clubs (and other business, social, pleasure or recreational clubs) appears to be non-deductible. But, expenses directly related to attendance at certain business leagues, such as the Chamber of Commerce and other similar organizations qualified under IRC Sec. 501(c)(6) should be deductible. Further guidance anticipated.
- COST OF DINNER AND REFRESHMENTS WITH A CUSTOMER OR CLIENT. As long as the expense is not lavish or extravagant, the deduction should be limited to 50 percent of the cost.
- COST OF PICNICS OR OTHER EVENTS WITH FOOD AND BEVERAGES FOR CUSTOMERS. Depending on the circumstances and who is invited, these costs may meet an exception to the 50 percent limitation for items made available to the general public and be fully deductible.
- COST OF SOFT DRINKS, BOTTLED WATER AND OTHER REFRESHMENTS ON HAND FOR CUSTOMERS, CLIENTS AND VISITORS TO A BUSINESS ESTABLISHMENT. It seems possible that the cost of these items may qualify for the exception for items made available to the general public and be fully deductible. Further guidance anticipated.
- COST OF REFRESHMENTS, LUNCH OR DINNER BROUGHT TO THE OFFICE FOR TEAM MEMBERS WORKING OVERTIME. The act limits the deduction of these costs to 50 percent for years 2018 through 2025. After 2025, the costs will be non-deductible (barring a change in the law).