Employee Recreation and Parties Survive TCJA Tax Reform

Here’s some good news about the Tax Cuts and Jobs Act (TCJA)…

The TCJA has retained the 100-percent tax deduction for qualified employee parties and qualified employee entertainment facilities.

Interestingly, if you provide a meal for your employees during a training program, you can deduct only 50-percent of the cost.

But if you know the rules, you can take your employees, spouses, and their children to the local country club where they play golf, play tennis, swim, and enjoy lunch, dinner, and snacks.

And in a rare act of kindness, your government has ruled that country club meals and activity produce a 100-percent tax deduction!

Want to find out how you can party hearty with your employees and save money? Read my new article titled Tax Tips: Employee Recreation and Parties Survive TCJA Tax Reform.

Three ways our fact-filled article can help you:

1. You’ll learn how to qualify an employee party for the 100-percent deduction. The IRS says that the following kinds of entertainment are examples of what passes muster for the full 100-percent deduction:

• Holiday parties, annual picnics, and summer outings
• Maintaining a swimming pool, baseball diamond, bowling alley, or golf course

Sounds good, but to make sure you’re in compliance with the law, read the full article.

2. Four rules you’ll need to remember if you want to successfully claim the 100-percent entertainment deduction. Make sure your entertainment:

• Is primarily for your employees
• Doesn’t discriminate in favor of the owners and highly-compensated employees
• Is fully documented. (This is very important.)
• Passes the “ordinary and necessary” business-purpose test

3. You’ll need to meet the “business purpose requirement.” Luckily, this is not hard to do. All you have to do is satisfy the overriding standard for business expense deductions known as the “ordinary and necessary” business purpose test. An ordinary and necessary expense simply means an expense that is “appropriate and helpful for your business.” We’ll show you how to play the game and win when you read the full article.