On Feb. 26, the U.S. Department of the Treasury and the IRS published proposed regulations on the changes to deductions for meal and entertainment expenses under IRC Section 274 enacted by tax reform.
Changes to meal and entertainment expense deductions
Prior to tax reform, a 50% deduction disallowance generally applied to entertainment, amusement, or recreation (collectively, “entertainment”) and business meal expenses. After tax reform, deductions for entertainment expense amounts paid or incurred after Dec. 31, 2017, generally are entirely disallowed.
The change generally did not affect business meals, other than expenses for food or beverages provided through an employer-operated eating facility meeting the requirements for de minimis fringes or provided for the convenience of the employer. Prior to tax reform, such expenses were fully deductible. After tax reform, such expenses for amounts paid or incurred after Dec. 31, 2017, generally are 50% deductible, and for amounts paid or incurred after Dec. 31, 2025, no longer will be deductible.