It would help if the IRS were a fully funded agency.  But, for the past four years or so, it has suffered because the GOP claims (FAKE NEWS) that WrongWing (non-)charities had a tough time getting approved as non-profit entities.  The GOP feels that these Political Action Committees (PAC) were chosen for special scrutiny. (FACT: All these fake charities that are really aimed at promoting political candidates from the Left, the Right, and the Middle were subject to the same extra scrutiny.)

The GOP also strangled the finances of the IRS to ensure it would have a hard time enforcing the financial provisions of the Patient Protection and Affordable Care Act (PPACA, aka Obamacare). Now that the most recent tax cut removed the penalty provision of PPACA as of 2019, one can expect the IRS will begin obtaining reasonable funding.

This lack of funding (and, therefore, personnel)  is why some of the provisions of the new tax law (PL117-95) are not fully explainable yet.  (It’s also why the frequency of audits have been cut in 1/2.)

Back to PL117-95 (formerly the Tax Cuts and Jobs Act).  We do know that the law explicitly deprived business of the entertainment deduction. And, the law also killed deductible meals. But, not all meals.

Let’s take my recent trip to Louisville, Kentucky. Where I spent a few days at the Mid America Truck Show. Meeting with transportation professionals, manufacturers, and truck drivers. All of which are normal interests for our company.

Of course, travel and lodging that were incurred during this trip were deductible. The new tax law didn’t change those rules. And, the incidentals- the taxis, the newspapers- they, too, were deductible.

Also unchanged are the deductibility for the  day(s) of travel to and from the destination are considered part.  (You should now that I have never availed myself of those “extra” days of travel; that practice stemmed from my desire to spend as much time with my kids as possible, even if it meant I had to fly the midnight special.)  And, each day of one’s business trip is deductible as long as FOUR (4) hours of business is conducted per day.  (That rule does not include the travel days.)

That brings up a key point, too. If you have a business meeting on Friday and another one on Monday, then the weekend is considered part of the business trip.  [I have used this trick often- especially if I brought my kid(s) along for the fun.]

As a matter of course the following items are 100% deductible- both under the old regime and the new tax law.

But, what about the meals? I know you all think since the tax law was passed, these expenses would not be deductible. NOPE!

I can deduct the costs for the meals that were required because I traveled away from home for business. Now, while the rules say they are 100% business related, the law also limits the deductiblity of those expenses to 50% of the total. (This same percentage deduction obtained under the old rules.) And, the cost of meals means the tip you leave the staff, too. Tips one provides wait staff is NOT to be included under the above list mentioning tips. These are food related; as such, they are also limited to the 50% deduction rules.

Don’t get carried away, either. You can’t deduct golfing fees while you are away. It makes no difference if you went by yourself, with a client, with a partner, with an employee, or with a prospect.

Nor can spa expenses (pedicures or manicures) appear, either. Nor can you deduct movies (even if you go to one of those hotels that has pay-per-view- and it’s not educational if you seek out one starring or directed by Stormy Daniels).   Which should make it clear that a Broadway (or other theater) show is also off the list for deductions. Yup, you guessed it- no concerts, either.

And, the costs to attend the games of my beloved Phillies- even as I take a client with me- nope. They are now the overhead expenses for our firm- or my personal expenses.

And, folks, don’t consider charging your room service or hotel meals to the hotel bill. Oh, sure, you can charge them to make it easier to handle your bill. But those costs MUST be delineated and separated from the accommodation charge. Because accommodations are fully deductible, but meals are limited to 50%.  And, you can bet the IRS will be very carefully examining (ok, via a paper audit) those charges.