Business meal expenses remain partially tax-deductible under the new tax law even if they’re connected with an activity defined as entertainment, according to temporary guidance issued this month by the IRS.
The tax reform law, which was enacted at the start of the year, ended deductions for business-related entertainment, amusement, or recreation but created uncertainty about whether associated meals remain partially deductible.
Under the temporary guidance, those meal expenses remain 50 percent deductible, but you must show that they were incurred separately from the entertainment expenses. The meal expenses are eligible, the guidance says, when "the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts."
The temporary guidance is in effect until the IRS issues formal rules on the deductibility of expenses for business meals, which is expected later this year.
For further details, see REALTOR® Magazine.