Changes under the sweeping tax overhaul passed in 2017 have affected business expense deductions for meals and entertainment, and the IRS has issued guidance on the changes.
While the 2017 law eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation, it never specified rules for the deductibility of business meals.
According to the IRS, taxpayers can still deduct 50% of the cost of business meals if the taxpayer, or an employee, is present and as long as the food or beverages are not considered lavish or extravagant.
Such meals can be provided to current or potential business customers, clients, consultants and similar contacts.
In addition, any food or beverages that are provided at an event but purchased separately from the event will not be considered entertainment.