Guidance for Handling Meals and Entertainment Under 2017 Tax Cuts and Jobs Act

From OMA Connections Partner Clark Schaefer Hackeet (CSH): “The change from 50 percent deductibility of entertainment costs to those costs being completely non-deductible falls under Internal Revenue Code (IRC) Section 274. The confusion about the change in this section involves how it impacts the deductibility of business meals with clients, customers and business partners. …

“Pending guidance from the IRS, we would like to advise you to separate meals with customers, clients and other business partners where business is discussed during the meal, into a separate general ledger account. Do not include these meals with entertainment costs like hockey tickets, golf, or show tickets. Also, do not combine these types of meal expenditures with travel-related meals, or in-house employee meals or meals associated with conventions or trade associations. If the costs are tracked separately in your system, it will be easier to apply the correct deductibility rule once we obtain the clarity needed.”