Late last year the government changed the tax code substantially and, among other things, created a new code section 199A for small business owners. This created a buzz as many business owners were made aware they would be getting a huge tax break. They also announced simplifications, like doing away with personal exemptions and instead increasing standard deductions. In the long run, it should make it easier for people to understand their numbers, although for many it will mean an uptick in what they are paying in tax.
One of the perceived losses was the deduction for many kinds of business meals and entertainment, which was generally “shoulder shrugged” off as a “cost” of simplification. “If we are getting a 20% tax break of profits and losing meals and entertainment then that’s still a big win” was the general attitude. BUT NOT SO FAST…IT’S HAVE YOUR CAKE AND EAT IT TOO TIME!
Guidance released from the IRS this week has walked back the fear of a harsh or complete loss of deductibility. Instead, the loss is focusing more on entertainment and food purchased during events, and not the old standard of the business lunch or dinner we have all had as a deduction for decades. More details are still coming out, but this announcement makes clear that tomorrow’s breakfast meeting is a go, and you can pick up the check
The post IRS Releases Guidance on Business Meal Deductions! It’s Good News! appeared first on Tax What If Doctor.
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