Changes to the Entertainment Expense

The Tax Cuts and Jobs Act permanently repealed most business deductions related to entertainment, amusement or recreation activities or a facility used in connection with any of the aforementioned activities. Membership and club dues remain non-deductible.

The above changes apply to amounts paid or incurred after December 31, 2017.

While the Act provided substantial changes to entertainment and employer transportation benefits, the deduction for 50% of food and beverage expenses associated with operating a trade or business is retained (meals consumed by employee while traveling for work). Additionally, the Act reduces the limit to 50% ( down from 100%) for the employer expenses associated with providing food and beverages to employees through an eating facility, which meets de minimis fringe requirements. Meals provided on-premises to employees for the convenience of the employer to employees, spouses and dependents remain 50% deductible until December 31, 2025, after which they become nondeductible.

Taxpayers subject to the Department of Transportation hours of service limits, such as interstate truck operators and bus drivers, are still allowed to deduct 80% of business meals consumed, or related to, any period of duty for which those limits are in effect. 

Please visit the Our Thoughts On...Transportation and Logistics blog for more articles, or contact a Schneider Downs tax advisor if you have any questions.