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IRS Issues Guidance Deducting Meals Bought During Entertainment

Deducting Meals

Guidance has been issued on the ability of small business owners to make deductions for meals bought while entertaining customers.

The IRS recently provided transitional guidance about the deductibility of expenses for business meals that are purchased in an entertainment context. (IRS Notice 2018-76)

The Basics

Businesses can deduct ordinary and necessary expenses paid or incurred during the tax year in carrying on a trade or business. Before it was amended by the Tax Cuts and Jobs Act, the tax code generally prohibited deductions for entertainment, amusement or recreation activities. However, the tax code provided exceptions to that prohibition, so many businesses could write off some entertainment expenses. Read more