Pension & Benefits News IRS proposed regs address elimination of deduction for meals and entertainment
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Thursday, March 19, 2020

IRS proposed regs address elimination of deduction for meals and entertainment

By Pension and Benefits Editorial Staff

The IRS has issued proposed regulations on the business expense deduction for meals and entertainment following changes made by the Tax Cuts and Jobs Act (TCJA, P.L. 115-97). The proposed regulations address the elimination of the deduction under Code Sec. 274 for expenditures related to entertainment, amusement or recreation activities and provides guidance to determine whether an activity is considered to be entertainment. Further, the limitation on the deduction of food and beverage expenses isalso addressed in the proposed regulations. These proposed regulations generally follow IRS Notice 2018-76 (I.R.B. 2018-42, 599), which provided transitional guidance on the deductibility of expenses for certain business meals.

The regulations are proposed to apply for taxable years that begin on or after the date of publication of the final regulations in the Federal Register. Pending the issuance of the final regulations, the proposed regulations may be relied on for entertainment expenditures and food or beverage expenses, as applicable, paid or incurred after December 31, 2017. In addition, the guidance in Notice 2018-76 may be relied on until these proposed regulations are finalized.

Source: 85 FR 11020.

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