Entertainment Tax Deductions

Major Meals, Entertainment, Vehicle Deduction Changes

The Party’s Officially Over:
Meals, Entertainment, and Other Fringe Expense Changes in Final Tax Reform Bill

Changes to Meals, Entertainment, and Other Fringe
Expenses in Final Tax Bill

 

Current Law

Tax Bill

Entertainment
Expenses

Deduction allowed for 50% of the ordinary and necessary expenses for
activities considered entertainment, amusement, or recreation, or facility
used in connection with the activity, unless taxpayer establishes expense is
directly related to or associated with the active conduct of the taxpayer’s
trade or business; limitation on deducting facility expenses applies in the
case of a club; expenses are fully deductible if included as compensation to
employee

No deduction is allowed for ordinary and necessary expenses for
activities considered entertainment, amusement, or recreation, or facility
used in connection with the activity; elimination of deductibility for
facility expenses applies in the case of a club; effective 1/1/2018; expenses
remain fully deductible if included as compensation to employee

Business
Meals

Employers are allowed to fully deduct the cost of
business meals provided to employees at an employer-operated eating facility
as a de minimis fringe

Employers can only deduct 50% of the cost of business
meals provided to employees at an employer-operated eating facility as a de
minimis fringe as of 1/1/2018; no deduction allowed after 12/31/2025

Meals
furnished for the convenience of the employer

Employers can fully deduct the cost of meals provided which are
excludable from the gross income of employees and provided for the
convenience of the employer

Deductible amount decreases to 50% after 1/1/2018; no deduction
allowed after 12/31/2025

Qualified
Transportation Fringes

Qualified Transportation Fringes are excluded from
an employee’s income and are fully deductible by an employer, subject to
monthly limits, and include: 

1)   
Transportation
in commuter highway vehicle for travel between work and home for employee;

2)   
Transit passes;

3)   
Qualified parking;
and

4)   
Qualified
bicycle commuting reimbursement

No deduction is allowed for the expense of qualified
transportation fringe provided to employee of taxpayer; travel between work
and home of employee in commuter highway vehicle is still deductible if necessary
for ensuring an employee’s safety; qualified bicycle commuting reimbursement
expenses remain deductible if incurred prior to 1/1/2026

About The Author

Daniel Quintana

Daniel Quintana of Kurtz & Company, P.C. in Dallas Texas. https://www.linkedin.com/in/drquintana