The Business Meal Expense Deduction After the TCJA

Published on February 07, 2020

Some taxpayers have wondered whether client-related business meal expenses remain deductible after the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, which generally repealed the deduction for entertainment expenses.

One reading of current law is that because business meals are a form of entertainment, they are no longer deductible. Notably, the Joint Committee on Taxation in its Bluebook for the TCJA indicated that business meals generally cannot be deducted.

On the other hand, the conference committee report for the TCJA expressly indicates that Congress intended business meal expenses to remain 50% deductible.

To address the uncertainty in this area, the IRS has provided interim guidance. Under Notice 2018-76, taxpayers generally may deduct 50% of client-related business meals if they meet certain requirements.

Under the notice, to be deductible, food-and-beverage expenses incurred at or during an entertainment event must be purchased separately from the entertainment, or the cost of the food and beverages must be stated separately from the entertainment's cost on one or more bills, invoices, or receipts.

The IRS plans to issue regulations on this topic. Notice 2018-76 states that until the IRS does so, taxpayers can rely on the guidance in that notice in determining the deductibility of business meal expenses.
(Source: AICPA – CPA Letter Daily - Tax Advisor – January 7, 2020)