Businesses may need to scale back on treating clients to sporting events like golf outings and football games after the new tax act ended a tax break for such entertainment. The tax overhaul eliminated a 50% deduction for business-related expenses for “entertainment, amusement or recreation.” This means luxury boxes at stadiums and arenas, along with theater and concert tickets, will be more costly for firms that use them to woo clients. Businesses using entertainment deductions extensively, including law, investment and accounting firms, will have to gauge the effects on their bottom lines.
While eliminating the deduction will restrict professionals who promote their business by entertaining clients, the 50% of meal deduction is still intact.
The loss of the entertainment deduction is a small price to pay after corporate rates were slashed to 21% from 35% and a 20% deduction for many “pass-through” businesses was created.
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