The business meal expense deduction after the TCJA
Uncertainty continues regarding whether food-and-beverage expenses incurred in association with a taxpayer’s trade or business are “entertainment” and therefore not deductible following the passage of the law known as the Tax Cuts and Jobs Act (TCJA).1 Although the definition of entertainment is not provided in the statute, Treasury and the IRS have consistently viewed and treated food-and-beverage expenses as entertainment, and the courts have consistently applied that interpretation of the statute in their decisions.
In October 2018, the IRS issued Notice 2018-76 to announce its intent to publish proposed regulations under the amended statute and provide interim guidance on the deductibility of business meal expenses under Sec. 274, as amended by the TCJA. Taxpayers are still waiting for Treasury to issue proposed regulations. Without them, taxpayers continue to question whether business meal expenses are deductible and call for Treasury regulations clarifying the effect of the TCJA on the business meal expense deduction. Taxpayers should continue to rely on Notice 2018-76 as substantial authority for their business meal expense deductions until proposed regulations are issued. In the absence of more definitive guidance, the Treasury notice is substantial authority under Sec. 6662.
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