Final regs issued on meals & entertainment deductions

The final regulations issued by the Internal Revenue Service on the business expense deduction for meals and entertainment reflect changes made by the Tax Cuts and Jobs Act of 2017.

Generally, reform eliminated the deduction for expenses related to activities that are generally considered entertainment, amusement or recreation. These regs address the disallowance of the deduction for those kinds of activities, including the applicability of certain exceptions to this disallowance.

Taxpayers can still deduct business expenses related to food and beverages if certain requirements are met. The regs provide guidance to determine if an activity is considered entertainment, as well as address the limitation on the deduction of food and beverage expenses.

The original rules from the TCJA around deducting meals and entertainment had left many businesses unclear on what, exactly, they could deduct; the IRS had issued proposed regs back in February aimed at clarifying those rules.