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Entertainment Expense Deductions

By now, you’ve probably heard that businesses can no longer deduct entertainment expenses associated with or related to the business as a result of the tax reform. This means things like golf, sporting events, theatre, and other amusement or recreational activities you would do with existing or potential customers can no longer be written off as business expenses.

It’s not all bad – businesses can still write off some entertainment-related expenses under the Internal Revenue Code, for instance:

  • The company’s annual holiday party;
  • Expenses directly related to business meetings for employees, shareholders, or directors (food and beverage expenses are limited to 50 percent of the total cost);
  • Expenses treated as employee compensation; and
  • Recreational, social, or similar activities for employees.

When in doubt, consult your tax professional, and if the IRS issues further guidance on entertainment expenses and deductions, we will and report back in future updates.

For assistance with your business-related needs, please feel free to contact Kate Gadbois at kgadbois@kehb.com or (269) 324-3000.

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