Clarification to Chapter 20 of the 2018 Publication 17


Notice: Historical Content

This is an archival or historical document and may not reflect current law, policies or procedures.

If you have viewed or downloaded the 2018 Publication 17, please note the following.

The discussion in chapter 20 relating to the deduction for meal expenses is clarified to provide that some meal expenses incurred in connection with entertainment activities are deductible, subject to the 50% limitation, even though entertainment expenses are no longer deductible. As a result, the paragraph entitled “A meal as a form of entertainment” on page 144 should be disregarded. Meals provided during or at an entertainment event may be deductible if they satisfy all of the following.

  1. The expense is an ordinary and necessary expense paid or incurred in carrying on a trade or business.
  2. The cost of the meal is not lavish or extravagant.
  3. The taxpayer (or an employee of the taxpayer) is present at the meal.
  4. The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact.
  5. The cost of the meal is separately stated or is purchased separately from the entertainment and is not inflated to circumvent the entertainment disallowance rule. 

See the discussion in Notice 2018-76 for further details.