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The IRS is giving businesses back a break they thought they had lost due to the Tax Cuts and Jobs Act. The agency announced that companies can still deduct 50% of meals while entertaining clients and customers. The announcement cleared up confusion about whether the tax law changes had completely eliminated the benefit of writing off taking clients out to a meal.
The Tax Cuts and Jobs Act, eliminated the deduction for so-called entertainment expenses including golf outings, cruises and concert tickets. Most people believed this would include food purchased while taking clients out and about. The IRS has announced that the costs of those business meals are still deductible as long as they are on a separate receipt. This means buying a meal after playing golf or seeing a movie and then buying a meal after can be deducted. But if you buy a ticket to a sporting event that includes food and drink, that would not be eligible for the tax break.
This announcement comes after different agencies and organizations asked for the IRS to clear up the uncertainty. The IRS issued the preliminary guidance last week and said more formal regulations would be available in the future.
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