Ending months of speculation, the IRS has issued new guidance that allows business deductions for certain business meals, despite restrictions imposed by the new Tax Cuts and Jobs Act (TCJA) on entertainment expenses (IRS Notice 2018-76, 10/3/18). The new notice preserves deductions that many tax commentators thought were in doubt.
Now the IRS has clarified the rules in the new guidance. Under Notice 2018-76, taxpayers may deduct 50% of the cost of business meals if:
- The expense is an ordinary and necessary business expense under Section 162(a) that are paid or incurred during the tax year when carrying on any trade or business;
- The expense is not lavish or extravagant under the circumstances;
- The taxpayer, or an employee of the taxpayer, is present when the food or beverages are furnished;
- The food and beverages are provided to a current or potential business customer, client, consultant or similar business contact; and
- For food [Read More]