- Peter F Cicciari EA
TCJA eliminated the deduction for entertainment and curtailed the
expense deduction for meals. In a very business-friendly transitional guidance
(Notice 2018-76) on the deductibility of business meals, the IRS announced that
taxpayers generally may continue to deduct the food and beverage expenses
associated with operating their trade or business. Under this notice, taxpayers
may deduct 50% of an otherwise allowable business meal expense.
Under Sec 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, for
2021 and 2022 (not 2020), taxpayers will be able to deduct 100% of business meal
expenses where the food or beverages is provided by a restaurant. This change
doesn’t help employees, as job-related expenses for employees continue not to be
deductible (through 2025). Keep in mind that for a meal expense to be deductible:
o The expense is an ordinary and necessary expense paid or incurred
during the taxable year in carrying on any trade or business.
o The expense is not lavish or extravagant under the circumstances.
o The taxpayer, or an employee of the taxpayer, is present at the
furnishing of the food or beverages.
o The food and beverages are provided to a current or potential
business customer, client, consultant, or similar business contact.
Final regulation 1.274-12(b)(3) defines “business associate” as a “person with
whom the taxpayer could reasonably expect to engage or deal in the active
conduct of the taxpayer's trade or business such as the taxpayer's customer,
client, supplier, employee, agent, partner, or professional adviser, whether
established or prospective.”
Entertainment is still NOT deductible. No Dodger games ☹