June 27, 2018
By Stephanie Cumings
Published in Tax Notes
Tax observers are torn on whether the IRS has the power to restore the deduction for client business meals that Congress seems to have unintentionally axed in the 2017 tax law.
While some practitioners contend that the IRS can salvage the deduction, one professor argues that Congress will have to amend the law if it really intended to keep client business meals deductible. The answer hinges on whether client business meals constitute “entertainment.” Under the prior law, entertainment expenses were 50 percent deductible if they met certain qualifications, but the Tax Cuts and Jobs Act (P.L. 115-97) eliminated the deduction altogether.
“Up until this change in the law, it didn’t really matter whether or not food and beverage was considered entertainment because it was 50 percent deductible either way,” Michael L. Hadley of Davis & Harman LLP told Tax Analysts.
The TCJA conference report […]