Business Meals Under the Tax Cuts & Jobs Act

Posted by Lee Reams Sr. on

 

It is unclear whether or not business meals, those where a bona-fide business discussion takes place during the meal, are considered entertainment under the Tax Cuts & Jobs Act or whether they are classified as food or beverage expenses associated with operating their trade or business. 

In the past these types of business meals were deductible if a bona-fide business discussion took place during a meal. It seems under TCJA that a business meal may fall under the definition of entertainment and if so, they would no longer be deductible.   

Reg. Sec. 1.274-2(b) defines entertainment, and Reg. Sec. 1.274-2(b)(ii) includes a subjective test that is used to determine whether an activity is of a type generally considered to constitute entertainment. Neither one of them provide a bright line answer to the question, so we will have wait for some IRS regulations on the issue.

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