I’ve been meeting with clients lately who are extremely concerned about many of the confusing elements of the new tax law. And it is confusing — many CPAs are holding off on issuing any recommendations that aren’t reversible, waiting for a technical corrections bill and IRS guidance.

But one less confusing provision of the new tax law is clear — entertainment expenses are no longer deductible. Period.

The old law allowed a 50% deduction for entertainment expenses if business was discussed before, during, or afterwards. Starting January 1, 2018, unless the event has a direct business purpose, it cannot be deducted at all.

A few practical takeaways here:

1. If entertaining a client or sales connection, take them out to dinner instead of an event — and be careful that there is no entertainment component, like live music or theater.
2. Promotional events are still 100% deductible as marketing and advertising, so make sure your company has branding, signage, program recognition and advertising, etc. as a part of the gig.
3. There are rare situations where entertainment isn’t “Entertainment”, because a direct business purpose exists. For example, a luthier might take a potential client to hear a performance played on her instrument for the express purpose of illustrating the sound in a concert hall. The IRS might accept situations such as these as having a “direct business purpose” — but proper documentation will be essential.
4. This doesn’t mean you can no longer make business deals on the golf course or at the ball game — just make sure not to write them off on your tax return. There are other non-deductible expenses that are still a cost of doing business (such as parking tickets or other penalties), and Entertainment expenses should be tracked accordingly.

Source: The party’s over! Businesses can’t write off entertainment expenses under new tax law – MarketWatch