The 2017 Tax Cuts and Jobs Act changed the law to deny income tax deductions for entertainment, amusement, or recreation expenses. However, the Act did not directly address the deductibility of business meals at the time of enactment. In response to this confusion, the IRS has issued interim guidance about the deductibility of business meals, until proposed regulations are released.
Under the interim guidance, the IRS will continue to allow 50% deductibility of meal expenses, if:
- The expense is an ordinary and necessary business expense while the taxpayer is carrying out business.
- The expense is not lavish or extravagant under the circumstances.
- The taxpayer, or an employee of the taxpayer, is present when the meal is furnished.
- The meal is provided to a current or potential customer of the business, and
- For meals provided during or at an entertainment facility, they are purchased separately from the entertainment, or the cost of the meal is stated separately from the cost of the entertainment, on one or more receipts.
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