Changes to Meals and 
Entertainment Expenses
Monday, December 10th, 2018 
         Before the Tax Cuts and Jobs Act (TCJA) made significant changes to the tax code, business-related meals and entertainment (M&E) expenses were generally 50% deductible for tax purposes. The TCJA made some significant changes to the rules for these expenses. In this newsletter, we will provide a brief overview of how M&E expenses are now treated.
         The following types of M&E expenses are 50% deductible for tax purposes:
  • The costs of meals during business meetings and business travel
  • Meals provided for the convenience of the employer (i.e. occasional meals for employees working overtime)
  • Employer-operated eating facilities
  • Entertainment-related meals (as long as they are purchased and paid for separately from the entertainment event)
         Some types of M&E expenses are fully deductible for tax purposes. 100%-deductible M&E expenses include the following:
  • Office picnics or holiday parties
  • M&E expenses reported as taxable compensation to employees
  • The costs of food, beverages and entertainment available to the general public (i.e. snacks in a waiting room)
  • The costs of food, beverages, and entertainment sold to customers at full value (i.e. restaurant expenses)
         One significant change from prior years is that almost all entertainment expenses are now entirely disallowed. This includes expenses for sporting events, theater tickets, golf club dues, and company golf outings. 

         Going forward, it will be important to distinguish between 50%-deductible and 100%-deductible M&E expenses on our accounting records to ensure that the expenses can be properly reported on our tax returns.

Around the Office Updates
We are proud to announce that after years of education, study, and hard work, two of our associates have been awarded the Certified Public Accountant (CPA) designation! 

Jordan V. Smith was awarded his license on June 21st, 2018, and Nathan C. Bush was awarded on October 24th, 2018.

Congratulations, Jordan and Nathan!

       If you have any questions about how meals and entertainment expenses might affect tax planning for your business, please contact us at (970) 223-2727.