Prior to passage of the TCJA, a business was allowed to take a deduction of up to 50% of the cost of business-related entertainment expenses. With the passage of TCJA, an employer's cost of entertainment expenses are no longer allowed as a federal deduction. Massachusetts adopted this change as Massachusetts follows the current IRC in effect for trade or business expenses under IRC § 62(a)(1). Note however that this does not change the exclusion of these benefits from employees' income. Generally, the value of the entertainment is not taxed as income to the persons who benefit from the expenditures. The effect provides a nontaxable fringe benefit.
Origin: IRC § 162, 274; Notice 2018-76
Tax Type
Tax Expenditure
Item Number
Item Name
Description
Origin
FY2018
FY2019
FY2020
FY2021
FY2022
Personal Income Tax
Exclusions from Gross Income
1.019
Treatment of Business-Related Entertainment Expenses
Prior to passage of the TCJA, a business was allowed to take a deduction of up to 50% of the cost of business-related entertainment expenses. With the passage of TCJA, an employer's cost of entertainment expenses are no longer allowed as a federal deduction. Massachusetts adopted this change as Massachusetts follows the current IRC in effect for trade or business expenses under <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000062----000-.html" target="_blank">IRC § 62(a)(1)</a>. Note however that this does not change the exclusion of these benefits from employees' income. Generally, the value of the entertainment is not taxed as income to the persons who benefit from the expenditures. The effect provides a nontaxable fringe benefit.
IRC § <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000162----000-.html" target="_blank">162</a>, <a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000274----000-.html" target="_blank">274</a>; Notice 2018-76
24.6
25.4
25.9
27.5
28.1
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