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BUSINESS Friday 8 February 2019
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Ouch! Some business owners may be shocked by lost tax breaks

By JOYCE M. ROSENBERG statement is, don’t let tax
Associated Press considerations drive the
NEW YORK (AP) — As small business decisions,” Rubin
business owners compile says. Or, as tax advisers
their income tax returns, sometimes tell their clients:
they may have an unpleas- Don’t let the tax tail wag
ant surprise — some popu- the dog.
lar business deductions EMPLOYEE EXPENSES
have disappeared or been The law also eliminated the
reduced under the new tax deduction owners could
law. take for subsidizing their
While the law gave small employees’ commuting
business owners new tax costs. Similar to their deci-
breaks including a 20 per- sions about entertainment
cent deduction in income expenses, owners must de-
for many sole proprietors, cide whether they want to
partners and owners of continue giving employ-
S corporations, Congress ees money toward their
took back deductions for mass transit fares or park-
entertainment expenses, ing tabs; given the tight la-
employee transit benefits bor market, owners might
and what are called net want to continue providing
operating loss carrybacks. the benefits to make their
It also put ceilings on inter- companies better able
est deductions for some In this March 4, 2015 file photo, a fan eats a hot dog before a spring training exhibition baseball to compete for talented
businesses. Accountants game between the Chicago White Sox and the Los Angeles Dodgers, in Phoenix. workers. And taking the
and tax attorneys suspect Associated Press benefit away could be a
small business clients to es- able income plus its interest businesses. Many owners deductible; the tickets are morale-buster, says Leon
pecially miss the break for income, if it has any. A mo- use entertainment as a key not. Dutkiewicz, a CPA with Ci-
entertaining clients and tor vehicle dealer can also part of building and main- Owners can also deduct trin Cooperman in Phila-
customers. deduct its borrowing costs taining relationships with 100 percent of the cost of delphia. “When you run
“I think they’re going to for the vehicles it buys and clients. food at parties or picnics the math, you’re going to
be shocked at how much then sells — what’s known But owners can still deduct for employees. lose more in goodwill than
more they didn’t get as a as floor plan financing in- the cost of taking a client While the loss of the enter- you would from losing the
deduction,” says Joseph terest. out for breakfast, lunch or tainment deduction may deduction,” he says.q
Perry, a certified public ac- But interest expenses that dinner; half the amount discourage some owners
countant with Marcum in are above the limit can be spent for a business meal from treating customers
Melville, New York. carried over and deduct- is deductible. The IRS also to tickets or a golf game,
A look at the disappearing ed the next year; they will says owners can buy food others will decide that pay-
deductions: count toward that year’s for a customer at an enter- ing for entertainment is a
INTEREST ceiling. And real property tainment event as long as worthwhile investment in
There is now a limit on how businesses including land- the food is paid for sepa- their companies’ future
much interest businesses lords, developers and real rately. In a notice about because of the goodwill it
can deduct on their loans estate managers and bro- meals and entertainment creates. That’s good busi-
and credit lines. While the kers can choose to be ex- expenses issued in Octo- ness sense, says Ken Rubin,
smallest businesses, those empt from the deduction if ber, the agency used hot a CPA with Rubin Brown in
with up to $25 million in av- they follow rules on depre- dogs at a baseball game St. Louis.
erage annual revenue over ciation of their property. as an example. The food is “Normally, our general
the previous three years, ENTERTAINMENT
have no ceiling on the in- Owners who take custom-
terest they can deduct, ers to sporting events or the
there are many small busi- theater or treat them to a
nesses above that thresh- round of golf will have to
old that are being affect- foot the entire bill for those
ed. IRS regulations limit the activities. The new law has
deduction to 30 percent of done away with the en-
a company’s adjusted tax- tertainment deduction for