Prior to the Tax Cuts and Jobs Act (TCJA) passed in December, companies could deduct 50% of meals and entertainment (M&E) costs incurred, provided that they could establish that the item was directly related to the active conduct of the taxpayer’s trade or business. As a result, many companies combined these M&E expenses into one general ledger account. Under the new law, treatment of many of these expenses has been changed, and businesses should consider making modifications in their general ledger accounts to capture these expenses into different buckets. There are also some less defined areas, where further guidance from the IRS is anticipated.
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