The Tax Cuts & Jobs Act (TJCA) repealed the deduction for business entertainment beginning in 2018. This includes expenditures for taking clients to sporting events and shows, and paying for season tickets for various sporting events. Generally, any dues for social clubs such as country clubs or athletic clubs will also be non-deductible.
Most business-related meals will be 50% deductible. If no business is discussed, the meal is not deductible for tax purposes and should be classified as entertainment.
Deductions will be permissible for sponsorship payments, net of the fair market value of any meals and entertainment, as well as for payments for professional dues and meetings such as civic organizations, trade associations and professional organizations.
Proper classification of the above-cited expenditures will be important for proper tax reporting. Accordingly, it is essential to have your company’s internal accounting set up appropriately. Please contact us if you would like assistance in identifying and classifying these expenses to treat them correctly on your tax return.
By Terri L. Marakos, CPA
