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New Rules for Business Entertainment
Saturday, January 20, 2018

For small business owners, there are mostly positive things about the new tax bill, such as
  • New 20% business income tax deduction 
  • Lower tax rates
  • Increased and faster depreciation schedules for business property
This is all true (although the 20% business income tax deduction gets complicated once you exceed the income thresholds, but that is a subject for another day!)
The real purpose of this blog is to let you know/WARN you that the tax rules for business entertainment deductions have changed.  As of this year, entertainment with clients is no longer allowable as a business expense.  That means you can't write off that round of golf, a concert, country club expenses, or anything else of that nature.

When it comes to business meals, this is the deal:

         1)  Rules prior to 2017:  Taxpayers generally could deduct 50% of expenses for business-related meals. Meals provided to an employee for the convenience of the employer on the employer's business premises were 100% deductible by the employer and tax-free to the recipient employee.
         2)  Rules from 2018 forward:  I believe meal expenses incurred while traveling on business are still 50% deductible, but the 50% disallowance rule will now also apply to meals provided on the employer's premises for employer convenience.  There is a little confusion on this due to no IRS guidance on this issue yet, but that is my interpretation of things.

However, what's not confusing is that business entertainment expenses are not allowed anymore.  Please be aware of this if you are a business owner!

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