The Internal Revenue Service recently issued guidance (Notice 2018-76) on the business expense deduction for meals and entertainment following law changes in the Tax Cuts and Jobs Act (TCJA). The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. At that time, it wasn't clear if meals were also eliminated as a deductible business expense.
Under this new IRS guidance, taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.
This is very good news indeed! The following table summarizes the percentage of meals and entertainment that are currently deductible under TCJA.