TMTW #369-New Tax Law Series- Part 1:Tax Reform Terminates Business Entertainment Deductions

Tax and Money Tip of the Week:
New Tax Law Series-
Part 1: Tax Reform Terminates Business Entertainment Deductions

January 31, 2018 | No. 369


Lawmakers finally did it.

First, they reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. Later, in 1993, they reduced that 80 percent to 50 percent.

And now, with the newest tax reform, lawmakers simply killed business deductions for directly related and associated entertainment effective January 1, 2018.

For example, during 2017, you could take a prospect or client to a business dinner followed by the theater or a ballgame and deduct 50 percent of all the monies spent, providing you passed some tax law tests on business discussion and associated entertainment.

Now, in what you and I thought was a business-friendly tax reform package, you find that lawmakers exterminated a big chunk of business entertainment. You can no longer deduct entertainment that has as its mission the generation of business income or other specific business benefit.

The 2018 tax reform prohibition against deductible entertainment is true regardless of your business discussion, negotiation, business meeting, or other bona fide transaction.

Here’s a short list of what died on January 1, 2018, so you can get a good handle on what’s no longer deductible:

  • Business meals with clients or prospects
  • Golf
  • Skiing
  • Tickets to football, baseball, basketball, soccer, etc., games

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.Questions or Comments?

Mark Vitek, CPA/PFS, CFP®
…until next time

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