From Fortune 500 giants to 20-employee businesses, virtually every company faces the same task: tracking, recharacterizing and evaluating meals and entertainment expenses to reduce tax liability and audit exposure.

The Tax Cuts and Jobs Act of 2017 significantly changed how organizations must manage this deduction, and more companies are looking for better ways to remain compliant while effectively managing this important tax benefit. Broadly, entertainment expenses are now no longer deductible, and most meals are 50% deductible.

A&M’s Meals and Entertainment offering helps companies accurately track and report meals and entertainment expenses and document qualified deductions to support the claim to the IRS.

What are the benefits of maximizing meals and entertainment deductions?

Following the passage of the Tax Cuts and Jobs Act, companies must handle this deduction quite differently. Since entertainment expenses are no longer deductible, for example, there may be ways to shift the tax characterization to redeem some deductibility. Better tracking and reporting will likely result in a reduced tax liability.

Other benefits of fully and accurately accounting for meals and entertainment expenses include:

Reduction in tax liability: In many cases, reclassifying certain expenses can result in larger deductions. For instance, some items originally deductible at 50% may qualify for 100% deductibility and reclassifying them will more accurately reflect the expense.

Improved risk mitigation: Properly reporting meals and entertainment expenses not only ensures your company is maximizing the tax benefit it qualifies for but also properly characterizes items in the event of an IRS audit. It provides the Client with a high level of confidence regarding any exposure they may have faced otherwise.

Maximized deductions in the current year. Disallowance is a permanent book/tax difference in meals and entertainment. The more companies can maximize deductions in the current year, the better off they will be.

Why should you use A&M’s Meals and Entertainment solution?

Many clients depend on A&M’s years-long experience and a deep expertise in the meals and entertainment area. Clients look to us for: 

Maximized savings, minimized exposure

Prior to the tax cut act, the meals and entertainment deduction was an easier and more beneficial calculation for tax returns. A&M understands at a high level how to charge different expenses and translate that knowledge to the transaction level to optimize tax benefits and limit audit exposure.

Wide-ranging expertise

A&M’s meals and entertainment team has the skills to work with detailed data while simultaneously understanding the ins and outs of the technical tax requirements. We can also employ other teams within A&M to tackle thorny problems. For example, on the largest of data sets, we partner with A&M’s disputes and investigations (DI) group to complete statistical sample analysis for the largest of companies.

Did you know?

Company picnics are 100% deductible

Holiday parties, anniversary celebrations and picnics for employees are all activities in which companies can deduct 100% of expenses. They just have to be classified correctly.