IRS updates regulations on deductions for meals and entertainment

The IRS this week issued proposed regulations for businesses to follow when deducting meals and entertainment, in response to changes made by the Tax Cuts and Jobs Act (TCJA).

The TCJA in 2017 removed the deduction of any expenses related to entertainment, amusement or recreation. This specifically includes the limitation of deduction for food and beverages. The proposed regulations address the removal of these expenses as well as provide guidance on determining if an activity is considered entertainment.

“The proposed regulations affect taxpayers who pay or incur expenses for meals or entertainment,” wrote the IRS on Monday. “These proposed regulations generally follow Notice 2018-76, issued on Oct. 15, 2018, which provided transitional guidance on the deductibility of expenses for certain business meals.”

A public hearing on the proposed regulations will be held on April 7. Taxpayers affected by the changes as well as any interested parties can submit comments regarding the proposed regulations beforehand.

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