What Company Events Can I Deduct?
Prior to the Tax Cuts and Jobs Act of 2017, meals and entertainment costs were 50% deductible by a business as long as they served a business purpose. In 2018 that changed. So what can you deduct?
The bulk of entertainment costs are no longer deductible. This includes tickets to sporting events, sky box rentals and concert tickets. What you can still deduct at these types of events is the cost of food and beverage if it can be separated from the cost of the entertainment. For example, the catered food in the skybox could be deducted at 50%.
What still remains deductible are company events such as the company holiday party or summer picnic. The IRS also allows a business to deduct the cost of fringe benefits such as health club memberships or other social activities provided for the benefit of the employees.
The deductibility of meals has remained basically untouched. Most business related meals remain 50% deductible. These include taking a client out for dinner, meals while an employee is traveling, and entertainment meals that can be clearly separated from the entertainment.
There are a few types of meals that can be 100% deductible. This includes meals provided to employees as a de minimis benefit such as pizza when working late at night, meals provided to promote goodwill in the community and meals provided to employees while attending a charitable event.
With both meals and entertainment it is best to create separate line items for each type of deductible or non-deductible expense. It is also best to save receipts in case of an IRS Audit. Do you want more tax tips? Download our Exit 288 Tax Ebook!