April 2, 2021
NBAA members now have access to an important resource to help them interpret the impact on business aviation of IRS regulations on business meals and entertainment expenses.
The Internal Revenue Code generally has disallowed deductions for entertainment activities but excepted such expenses if they were “directly related” or “associated with” certain business activities. This changed with the Tax Cuts and Jobs Act (TCJA), which introduced major changes to the tax code, including to Section 274, with the elimination of deductions for business entertainment expenses.
NBAA has worked closely with the IRS and the Department of the Treasury since the TCJA became law to provide input on the regulatory process and impacts on business aviation. This included involvement in a final rulemaking on the meals and entertainment issues. Thanks to NBAA’s continued engagement with the IRS, the final rules include important clarifications on how meals and entertainment deductions may impact the deductibility of flights on business aircraft. Review the final rule.
With the release of the final rules, NBAA’s Tax Committee, led by John Hoover, has created an informative resource for members titled, “The Impact on Business Aviation of Final Tax Regulations on Meals and Entertainment.”
“NBAA has worked diligently to introduce members to the rules that relate to meals and entertainment deductions, particularly on the issues we raised on meals,” said Hoover, a partner at Holland and Knight LLP.
Within this new resource, members will be guided through the following:
- Expenses for personal meals as a nonentertainment activity
- Travel costs for trips involving entertainment and nonentertainment activities
- Deductions for spouses traveling for nonbusiness purposes
- The application of the 50% deduction disallowance for meals
- A relaxation of punitive actions for improper reporting
- The adequate and full consideration exception