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Deducting Entertainment Expenses

What You Need to Know Regarding Changes to the Entertainment Expense Deduction

We are all in the relationship business.  Relationships lead to Sales.  Sales lead to Profits.  Many times, to cultivate relationships, we wine, dine, and entertain our current clients and prospects.  Thanks to the Tax Cuts and Jobs Acts the expenses that you previously wrote-off may no longer be deductible.

These new laws apply to small business and big business.

ENTERTAINMENT EXPENSES:  Prior to 2018, as long as the expense was related to conducting business, you were allowed a deduction for entertainment and recreation expenses.  The deduction was usually capped at 50%, but half was better than none.

For 2018 and forward, the deduction for Entertainment is 0%.  Zero.  Nada.

No matter if you’re courting new or potential clients, meeting vendors, or networking, these expenses will NOT be deductible:

  • Season ticket holders of football tickets, or any other sport

  • Golfing and other recreation activities

  • Country club dues and expenses

  • Fishing and hunting trips

  • Spa visits, concert tickets, etc

The entertainment items that are still deductible include:

  • Entertainment expenses that you treat as compensation to your employees (i.e. include in their W-2 wages)

  • Entertainment, recreation, or social expenses where you include all employees (Christmas party, etc)

What about the Meals deduction?  This has been a muddy topic over the past month and a half, and will continue to be, until there are court cases and IRS rulings to back up their position on the matter.  Because of that I think it’s important to contact your tax preparer and discuss your particular situation.

If you are unsure on any of the information please contact our office so we can discuss your particular situation.


 Joy Lizotte, CPA

Joy Lizotte, CPA

About Joy

I help service based businesses GROW by providing coaching and growth planning services that will take their business to the next level.

I promise you, working with a CPA can be much more exciting than crunching numbers and reviewing last year’s taxes. I look at the day-to-day of your business and help you find ways to perform better, grow bigger and generate revenue with greater ease.