Employee Recreation and Parties Survive TCJA Tax Reform

When you know the rules, you can party with your employees and deduct 100 percent of the cost. Interestingly, if you feed your employees during a training program, your deduction is only 50 percent. Make sure you know the rules that give you the 100 percent deduction for employee entertainment.

The IRS says that the following types of entertainment qualify for the 100 percent employee entertainment tax deduction:

  • Holiday parties, annual picnics, and summer outings
  • Maintaining a swimming pool, baseball diamond, bowling alley, or golf courseThe IRS makes it clear that the above are examples and that other types of entertainment may also qualify for the 100 percent entertainment deduction. The tax code states that “expenses for recreational, social, or similar activities (including facilities therefor) primarily for the benefit of employees” qualify for the 100 percent deduction.

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Reed Tinsley, CPA