Entertainment and Meal Deductions for Businesses

Entertainment and Meal Deductions for Businesses

The new tax law completely disallows any deductions for entertainment and now says that all meals must be otherwise deductible.  A deduction for meals that are entertainment related are not deductible at all.  It now becomes necessary to determine whether meals are nondeductible entertainment expenses or deductible business meals. 

For planning purposes, it is wise to hold business meals in venues that are not entertainment related such as nightclubs, cocktail lounges, theaters, country clubs, golf and athletic events, other sporting events or fishing and hunting type trips. 

Meals that remain deductible are limited to 50% of the cost.  Deductible meals include the following:

  • Those meals for business meetings, office meetings of employees, directors, or stock holders if there is a business function to the meal

  • During business travel, there must be a business function to the meal

  • Attending a seminar or convention even if the meals are not separately stated (calculated using reasonable method or per diem rates for the area you are in)

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