IRS Issues Guidance on Deductibility of Business Meals: Today, the Treasury Department and the IRS issued Notice 2018-76 providing transitional guidance on the deductibility of expenses for certain business meals under section 274 as amended by the Tax Cuts and Jobs Act. The notice provides that taxpayers may deduct 50% of an otherwise allowable business meal expense under section 274 if:
- The expense is an ordinary and necessary expense under section 162(a) paid or incurred during the taxable year in carrying on any trade or business;
- The expense is not lavish or extravagant under the circumstances;
- The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages;
- The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
- In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.
The notice states that taxpayers may rely on it until regulations on this topic become effective.
IRS Issues Procedures on Divisive Reorganizations Rulings: Today, the IRS issued Revenue Procedure 18-53 providing specified procedures for taxpayers who request private letter rulings on divisive reorganizations under sections 368(a)(1)(D) and 355.
IRS Releases Compliance Strategies for the Tax Exempt & Government Entities Division: Today, as part of its Fiscal Year 2019 Program Letter, the IRS Tax Exempt & Government Entities (TE/GE) Division released its compliance strategies. Compliance strategies are issues selected and approved by TE/GE’s Compliance Governance Board as priority work. The compliance strategies listed by TE/GE for exempt organizations include:
- Section 501(c)(7) entities: focus on investment income, non-member income, and non-filers of Form 990-T by tax-exempt social clubs.
- Section 4947(a)(1) Non-Exempt Charitable Trusts (NECTs): focus on organizations that under-report income or over-report charitable contributions.
- Previous for-profit: focus on organizations formerly operated as for-profit entities prior to their conversion to section 501(c)(3) organizations.
- Self-dealing by private foundations: focus on organizations with loans to disqualified persons.