The Biden administration’s first 100 days were largely focused on addressing the COVID-19 crisis—accelerating vaccine distribution and stabilizing public health. With that initial phase now behind him, President Biden has begun advancing broader policy priorities that span the economy, environment, technology, healthcare, and taxation.

Priority: Putting the Pandemic Behind Us

The American Rescue Plan Act (ARPA), passed in March 2021, provided $1.9 trillion in stimulus focused on:

• Direct stimulus checks

• Expanded unemployment and paid leave

• Emergency small business relief

• Support for state/local governments

• Vaccine distribution and testing

What to Watch:
While the pandemic will eventually recede, its economic and societal impacts will linger. Forward-looking businesses are adapting to post-pandemic realities—rethinking how they manage employees, serve customers, and ensure resilience amid future disruptions.

Priority: Doing Well by Doing Good

The administration has embraced Environmental, Social, and Governance (ESG) priorities, starting with climate action:

• Rejoining the Paris Agreement

• Proposing a $2T Clean Energy Revolution

• Eliminating fossil fuel emissions from power by 2035

• Promoting EV infrastructure, zero-emission transit, and eco-building standards

• Calling for a 50–52% emissions reduction by 2030 (vs. 2005 levels)

Regulatory Focus:
The SEC’s Climate & ESG Task Force is enhancing disclosure requirements for environmental, diversity, and governance practices.

What to Watch:
Public and investor expectations around ESG are growing. Forward-thinking companies are embedding sustainability, equity, and purpose into core operations—and those that do so effectively may see higher profitability and lower risk.

Priority: Innovation in the Spotlight

The pandemic underscored America’s reliance on technology. The Biden administration acknowledges this while signaling increased oversight of Big Tech—particularly around:

• Antitrust enforcement

• Cybersecurity protections

• Data privacy regulation

What to Watch:
CFOs are doubling down on digital transformation, but balancing tech investment with regulatory compliance will be critical.
📊 BDO Survey Highlights:

• 55% plan to increase R&D spending

• 39% accelerated digital investments due to the pandemic

Priority: Defining “Bidencare”

While sweeping healthcare reform is unlikely, the Biden administration is working to strengthen the Affordable Care Act (ACA):

• Expanding enrollment and subsidies

• Capping healthcare premiums at 8.5% of income

• Exploring a public option

What to Watch:
Employers should expect rising interest in expanded care access (especially mental health and telehealth) as employee well-being becomes a business imperative.

Priority: Building Back Better

The American Jobs Plan outlines the administration’s infrastructure vision, including:

• Roads, bridges, airports, transit

• Electric vehicle (EV) charging networks

• Broadband expansion and clean water

• Modernizing schools and housing

• Investments in R&D and workforce training

What to Watch:
Infrastructure spending could provide a major boost to productivity and supply chain stability. Projects with environmental and equity components will likely take priority.

Priority: Tax Increases on the Table

To fund investments, the Biden administration has proposed several tax changes:

• Raising the corporate tax rate from 21% to 28%

• Increasing individual tax rates on those earning over $400,000

• Enhancing GILTI and other international tax rules

• Reinstating elements of the corporate AMT

• Introducing surcharges and limiting deductions

What to Watch:
Per BDO’s 2021 Tax Outlook Survey:

• 92% of tax execs expect a corporate rate hike

• Priorities include income tax, international tax, and payroll adjustments

The midterms may dictate the legislative window for major tax reform. Until then, targeted changes are possible via reconciliation.

Priority: Regulating Wall Street

Appointing Gary Gensler (SEC) and Rohit Chopra (CFPB), the administration signaled a stricter approach to financial regulation. Expect:

• Increased enforcement

• Enhanced consumer protections

• Closer scrutiny of disclosure and compliance standards

What to Watch:
Robust compliance and data governance will become key differentiators for businesses, not just regulatory requirements.

Final Thoughts: The Role of Business in a Divided Climate

With midterm elections approaching and a polarized Congress, President Biden may face challenges pushing through all elements of his agenda. Businesses should prepare for rapid shifts, especially in ESG, innovation, infrastructure, and taxation.

Takeaway:
In moments of political gridlock, corporate leadership will play a pivotal role in driving progress. Businesses that align operations with policy shifts—and lead with purpose—can shape a more resilient and equitable economy.

The recently enacted Consolidated Appropriations Act offers valuable extensions and expansions of tax breaks for small-business owners. Below is a summary of the most relevant provisions to consider as you plan for the years ahead:

✅ Business Expense Deductions & Credits

• 100% Deduction for Business Meals
  Business meals (dine-in or takeout) provided by restaurants are fully deductible in 2021 and 2022.

• Work Opportunity Tax Credit (WOTC)
  Extended through 2025 for employers hiring individuals from 10 targeted groups.

• New Markets Tax Credit
  Qualifying investments may claim a 39% credit through 2025.

• Empowerment Zone Incentives
  Extended through 2025, though:

  • Enhanced first-year depreciation

  • Capital gains tax deferral
    are both eliminated beginning in 2021.

• Section 127 Student Loan Assistance
  Employers may pay up to $5,250 toward employee student loans (principal + interest) tax-free through 2025.

🏘️ Real Estate, Depreciation & Property Provisions

• 30-Year Depreciation (Elective)
  For residential rental property placed in service before 2018 (previously depreciated over 40 years), businesses may now use a 30-year straight-line schedule if they opted out of TCJA interest limitations.

• Motorsports Complex Depreciation
  Seven-year recovery period extended through 2025.

• Film, TV & Theater Production Write-Offs
  Qualified productions starting before 2025 are eligible for:

  • $15M first-year write-off limit

  • $20M limit in designated disadvantaged zones

• Racehorse Depreciation
  Racehorses two years old or younger placed in service in 2021 qualify for 3-year depreciation.

🌱 Energy Efficiency & Clean Tech Incentives

• Commercial Building Energy Deduction
  The per-square-foot deduction is now permanent:

  • $1.80/sq. ft. for energy-efficient improvements

  • $0.60/sq. ft. for partial qualifications

• Residential Energy-Efficient Home Credit
  Homebuilders may claim:

  • $1,000 or $2,000 per qualifying home through 2021

• EV Refueling Property Credit
  Businesses installing non-hydrogen alternative-fuel stations (e.g., electric vehicle chargers) can claim up to 30% of the installation cost through 2021.

• Hydrogen-Powered Vehicle Credit
  Businesses may claim up to:

  • $4,000 to $40,000 for qualifying hydrogen-fueled vehicles through 2021.

📉 Disaster Relief, Loans & Tax Treatment

• SBA EIDL Advances & Loan Assistance
  These funds are:

  • Non-taxable

  • Do not reduce tax attributes (like NOLs or basis)

• Farmer-Specific NOL Carryback Adjustment
  Farmers may elect a 2-year NOL carryback (instead of 5 years) retroactively, as if it had been in the original CARES Act.

📞 Need Help Navigating These Opportunities?

We can help you determine which tax breaks apply to your business and how to take full advantage of them.

Contact our office at 561-995-0064 to schedule a consultation.

If you have not received a PPP loan before, First Draw PPP Loans may be available to you.

Two things to know about the Paycheck Protection Program (PPP) first draw enacted on December 27, 2020:

• The first draw is for those who missed getting in on the original PPP, which expired on August 8, 2020.
• Don’t think of a PPP draw as a loan. It’s not a loan. It’s a cash infusion. You have to repay a loan. You don’t have to repay the PPP funds.

Who qualifies for first-draw PPP money today? You, most likely—if you file a business tax return and have not yet received any PPP monies.

But don’t wait. The money is going to run out fast, and once it’s gone, so is the PPP. And the new PPP ends March 31, even if the money is not gone by then.

You qualify for the PPP if any of the following are true:

• You file your taxes on Schedule C of your tax return. Businesses that file on Schedule C include independent contractors (often called 1099 folks), single-member LLCs, proprietorships, and statutory employees such as life insurance salespeople.
• You file your taxes on Schedule F (ranchers and farmers).
• You are a general partner in a partnership, but the partnership asks for and receives the money based on your and the other partners’ combined self-employment incomes, as adjusted.
• You operate as an S corporation.
• You operate as a C corporation.
• You are the only worker in the business—and if you have employees in the business, you qualify on both your ownership worker status and your employees’ W-2 status.

On December 21, 2020, Congress passed H.R. 133, the Consolidated Appropriations Act (CAA), 2021, which includes:

• Division N – Additional Coronavirus Response and Relief (ACRR)

• Division EE – Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTR)

The bill passed with strong bipartisan support and is expected to be signed into law. Below is a summary of the most relevant provisions for individuals and small businesses.

Individual Economic Relief

• $600 Stimulus Payments
  Individuals earning up to $75,000 (or $150,000 for married couples) will receive $600, plus $600 for each child dependent.

• $300 Weekly Unemployment Boost
  Additional federal unemployment benefits are reinstated through March 14, 2021, with eligibility extended through April 5, 2021, and maximum weeks increased to 50 weeks.

Business Meals Deduction

To support the restaurant industry, businesses can now deduct 100% of restaurant meals (dine-in and takeout) for expenses incurred from January 1, 2021 through December 31, 2022.

Paycheck Protection Program (PPP) Updates

• Second Round of Funding
  Eligible businesses may apply for a second PPP loan of up to $2 million, provided they:

  • Employ 300 or fewer employees per location

  • Have used or will use their first PPP loan

  • Experienced at least a 25% drop in gross receipts in any 2020 quarter compared to the same quarter in 2019

  Special Rule for Hospitality and Food Services:
  These businesses may borrow up to 3.5x average monthly payroll costs, still capped at $2 million.

• PPP Expense Deductibility Clarified
  PPP loan forgiveness is not taxable, and expenses paid with PPP funds are fully deductible, allowing for full tax benefits.

• EIDL Advance Adjustment Repealed
  PPP borrowers are no longer required to reduce their forgiveness amount by the EIDL advance they received.

• Simplified Forgiveness for Loans Under $150,000
  Borrowers can submit a simplified certification of eligibility and retain records for possible SBA review.

• Expanded Eligible Expenses
  In addition to payroll, rent, utilities, and mortgage interest, businesses can now use PPP funds for:

  • Personal protective equipment (PPE) and facility modifications

  • Supplier costs essential to operations

  • Software and cloud-based services

  • Accounting services

Grants for Shuttered Venue Operators

$15 billion is allocated for grants to eligible live venue operators, theaters, museums, promoters, and talent agents.

• Must show 25% revenue reduction

• Tiered distribution prioritizes applicants with the most significant revenue losses (90%+ or 70%+ revenue decline compared to 2019)

At least $2 billion is reserved for venues with fewer than 50 full-time employees.

Paid Leave Tax Credit Extensions

• Employer Paid Sick and Family Leave Credits
  Extended through March 31, 2021. Employers are not required to offer leave, but if they do, credits are available.

• Self-Employed Leave Credits
  May continue using 2019 earnings instead of 2020 to calculate credit amounts.

• Payroll Tax Treatment
  Qualified wages under this leave program are excluded from Social Security tax.

Deferred Payroll Tax Repayment Extension

Employers that postponed the 6.2% employee Social Security tax in 2020 now have until December 31, 2021 to repay it, with penalties and interest delayed until January 1, 2022.

Employee Retention Credit (ERC) Expansion

Changes apply to wages paid through June 30, 2021:

• Credit rate increased from 50% to 70% of qualified wages

• Per employee wage limit increased to $10,000 per quarter

• Applies to employers with 500 or fewer employees

• New employers that did not exist in 2019 may also qualify

Employers can now claim both PPP and ERC, subject to restrictions.

Unemployment Insurance Enhancements

• Extended Pandemic Unemployment Assistance (PUA) through March 14, 2021

• $300/week federal supplement reinstated

• State reporting required to track individuals refusing to return to suitable work

If you have questions about how these provisions affect your business or individual situation, contact our office at 561-995-0064 for assistance.

With the 2020 general election results mostly finalized, attention turns to what federal tax changes could be implemented under the Biden administration. While Democrats gained control of the White House and House of Representatives, control of the Senate hinged on Georgia’s runoff elections in early January. Even with a narrow Democratic majority, passing significant tax reform remains uncertain due to political dynamics and the ongoing economic impact of COVID-19.

Below is a summary of the most prominent proposals in the Biden tax plan, including both individual and corporate provisions.

Individual Tax Proposals

Higher Maximum Individual Tax Rate

• Top rate would increase from 37% to 39.6%.

• Applies to those earning over $400,000 (specific income definition unclear).

Limit on Tax Savings from Itemized Deductions

• Limits tax benefit of deductions to 28% for higher earners.

• Reinstates phase-out of itemized deductions for high-income taxpayers.

• Likely supports repeal of the $10,000 SALT deduction cap.

Higher Tax Rate on Long-Term Capital Gains

• For income above $1 million, long-term capital gains and qualified dividends would be taxed at 39.6% (plus 3.8% NIIT).

• Maximum effective rate: 43.4% (up from 23.8%).

Increased Social Security Tax for High-Income Individuals

• Restarts 12.4% Social Security tax for income above $400,000.

• Creates a “donut hole” structure between the current cap and $400,000.

Elimination of Step-Up in Basis for Inherited Assets

• Would remove step-up in basis at death.

• Gains would be taxed on inherited assets as if sold at death.

Elimination of Certain Real Estate Tax Breaks

• Repeals the $25,000 rental loss allowance for active participants.

• Ends 1031 like-kind exchanges for real property.

• Eliminates QBI deduction and accelerated depreciation for certain real estate activities.

Phaseout of QBI Deduction

• The 20% deduction under Section 199A would phase out for incomes over $400,000.

Enhanced Child and Dependent Care Tax Credits

• Child tax credit increased to $3,000 ($3,600 for children under 6), fully refundable.

• Dependent care credit increased to $8,000 for one child, $16,000 for two or more; also fully refundable.

Health Insurance Credits

• Ensures no household spends more than 8.5% of income on premiums.

• Refundable credits would reduce cost for middle-income families.

First-Time Homebuyer Credit

• Up to $15,000 refundable credit at time of purchase.

Equalized Retirement Plan Contribution Benefits

• Would revise rules to provide greater benefit for lower-income earners, reducing current skew toward high earners.

Corporate Tax Proposals

Higher Corporate Tax Rate

• Increase from 21% to 28%.

Minimum Tax on Book Income

• 15% minimum tax on book income for corporations earning $100 million or more.

International Tax Changes

• GILTI inclusion taxed at 21% on a country-by-country basis.

• Eliminates QBAI exemption.

• Adds penalties for offshoring jobs and new credits for domestic production (“Made in America” credit).

Financial Risk Fee

• Imposed on financial institutions with more than $50 billion in assets.

Green Energy & Environmental Proposals

• Reinstates or expands tax incentives for energy-efficient commercial and residential investments.

• Reintroduces and expands electric vehicle credits.

• Eliminates deductions for fossil fuel development costs.

Conclusion

While these proposals outline the Biden administration’s tax agenda, implementation depends on several factors:

• Senate control and use of budget reconciliation.

• Political appetite for tax increases in a post-COVID economy.

• Prioritization of public health, economic recovery, and bipartisanship.

Businesses and individuals should remain vigilant, as even incremental tax changes could significantly impact planning strategies. We will continue monitoring legislative developments and provide updates as more information becomes available.

Questions about how these proposals could affect you or your business?
Contact our office to schedule a consultation.

2020 has been a year of unprecedented challenges. As businesses continue to manage the impacts of COVID-19, many are also looking ahead to 2021, with uncertainty surrounding the public health crisis, a new administration taking office, and potential changes in tax policy.

Regardless of your business’s stage of recovery, now is the time to evaluate year-end strategies that may reduce tax liability and strengthen your position moving into the new year.

Strategic Considerations Based on Income Projections

Scenario 1: Income or Tax Rates Are Expected to Remain Constant or Decrease in 2021

• Defer Income

  • Cash-basis taxpayers can delay billing into 2021.

  • Accrual-basis taxpayers may take advantage of the Tax Cuts and Jobs Act (TCJA) provision allowing deferral of advance payments for up to one year if aligned with financial reporting.

• Accelerate Deductions

  • Cash-basis businesses can pay 2020 expenses now.

  • Accrual-basis businesses can leverage accounting strategies to recognize deductions in 2020.

• Expense Capital Assets

  • Place eligible assets in service before year-end to take advantage of 100% bonus depreciation.

• Close on Taxable Acquisitions

  • Closing deals in 2020 may allow for immediate expensing of tangible property included in the purchase.

Scenario 2: Income or Tax Rates Are Expected to Increase in 2021

• Accelerate Income

  • Cash-basis businesses recognize income upon receipt; accrual-basis businesses can complete work and bill clients now.

• Defer Expenses

  • Delay asset purchases or expense recognition into 2021 when tax rates may be higher.

• Delay Business Acquisitions

  • Consider waiting to finalize acquisitions until 2021 to maximize related deductions under higher anticipated rates.

Additional Year-End Tax Planning Opportunities

Research & Development (R&D) Credit

• Consider accelerating R&D efforts before 2022, when amortization rules will begin to limit immediate deductions.

Section 199A Deduction

• Pass-through entities should evaluate W-2 wages and income thresholds to optimize the 20% qualified business income deduction.

Bonus Planning

• Accrual-basis corporations may deduct bonuses paid by March 15, 2021, if properly accrued in 2020 and employees do not own more than 50% of the company.

S Corporation Planning

• Shareholders may contribute capital or make loans to the business to increase basis and deduct current year losses.

Partnership Loss Deductions

• Basis can be increased by additional contributions or assuming partnership liabilities. Carefully manage liability allocations.

Distributions of Appreciated Property

• Delaying distributions until 2021 can defer capital gains tax recognition.

Business Interest Deduction

• The CARES Act increased the limitation from 30% to 50% of adjusted taxable income for 2019 and 2020. Consider how this may impact interest deductibility.

Section 382 Studies

• Certain restructuring techniques can increase net operating loss (NOL) usage limitations.

Entity Simplification or Restructuring

• May create loss deductions or enhance interest deductibility by combining closely held businesses or restructuring corporate groups.

Transaction Cost Analysis

• Evaluate capitalized deal costs for potential deduction or reclassification.

Qualified Small Business Stock (QSBS)

• Taxpayers may exclude gains on QSBS held for more than five years if the corporation and stock qualify under Section 1202.

IRS Account and Interest Recovery Services

• Identify IRS processing errors and recover interest to reduce year-end tax obligations.

Conclusion

While each business’s circumstances are unique, these strategies may help reduce tax liability and position you for a stronger financial year ahead. Consult with your tax advisor to determine which actions are best suited to your goals.

For personalized planning assistance, contact our office to schedule a year-end review.

QR Codes will now show up on some IRS documents for the first time! The IRS has included this barcode technology to new notices going out to millions of taxpayers. CP14 and CP14 IA balance-due notices that inform taxpayers that they owe money on unpaid taxes and their payment options are now equipped with QR barcodes to assist in navigating to IRS.gov.

Simply use your smartphone to scan a QR code in the CP14 or CP14 IA to go directly to IRS.gov and securely access your account, set up a payment plan or contact the Taxpayer Advocate Service. Scanning the QR code on the CP14 or CP14 IA will give the taxpayer direct access to the information they need on IRS.gov to resolve their account balance online without the need to call or interact with the IRS directly.

“These codes will give taxpayers immediate access to the most important information for them to pay their balances, set up payment agreements or reach out for help,” said Darren Guillot, the IRS Small Business/Self-Employed deputy commissioner for collection and operations support, in a statement. “We understand there’s a lot of information on the web, and we want to give taxpayers more secure tools that can more easily help them resolve their tax situations.” Generally sends more than 8 million CP14 notices to taxpayers annually. These are the first legal notice alerting taxpayers that they have a balance due. “This will help make the entire process easier for taxpayers,” Guillot said.
Stay tuned, the IRS is assessing the possibility of adding QR codes to other balance-due notices in the future.

As we move through the final months of this very uncertain year, you may be considering some year-end charitable giving. It might be a good idea for a refresher on charitable tax law, seeing how these laws have had an overhaul of new changes over the last 3 years.

The 2017 Tax Cuts and Jobs Act: 2017 Tax Cuts and Jobs Act increased the deductibility of cash contributions. Before the TCJA, cash gifts were deductible only to the extent of 50% of the donor’s adjusted gross income. TCJA increased that to 60%.
This 60% contribution obviously makes cash gifts more appealing for individual donors. However, it also can act to reduce the unrelated business income tax that certain charities pay. Charities in trust form can take a 60% deduction for cash contributions as well, which may significantly mitigate the UBIT they incur from donated assets like S-corps, debt-encumbered real estate, and certain pass-through interests (think LLCs and partnerships).

The standard deduction increased by the TCJA to $12,200 (for 2019) for individual taxpayers and $24,400 for married couples filing jointly. This has the effect of making itemized deductions less common, including for charitable contributions – current estimates suggest only 13.7 percent of taxpayers will itemize their 2019 taxes. One approach many taxpayers have taken is donation “bunching” where they contribute a large amount in a single year to ensure that they can take the itemized deduction, instead of smaller amounts that would not allow itemizing.

Estate Tax Exclusion: This tax excluding increased up to $11 million for a single individual, and $22 million for a married couple. Which means fewer estates will be subject to tax, and many large life insurance policies intended to provide tax-free cash to heirs now do not serve their original purpose. These policies can now be repurposed by designating other tax-challenged assets to charity (e.g., IRAs, commercial annuities or qualified retirement plans) and then “replace” those assets to beneficiaries in a tax-wise way.

The Qualified IRA Charitable Contribution (QCD) was reinstituted prior to the TCJA. A QCD is a direct contribution to charity from an IRA for individuals over 70.5, which counts towards the IRA holder’s required minimum distribution. The maximum donation each year is $100,000. The increased standard deduction means that taxpayers should consider charitable giving through use of a QCD. This contribution avoids increasing their income (because the distribution goes directly to charity) while also allowing the donor to still take the standard deduction.

The SECURE Act was passed in late 2019 attracting less attention than the TCJA. Financial planners noted one key change to IRAs. Previously IRA account holders were able to designate non-spousal beneficiaries on the accounts, and on death, that beneficiary would be able to “stretch” the required IRA withdrawals over their lifetimes. This allowed young family members to receive the IRAs, take small distributions initially, and grow the accounts over many decades. The SECURE Act instead made such beneficiaries complete the withdrawals in 10 years.

A charitable workaround for the IRA change is to designate a lifetime-income charitable vehicle as the beneficiary. This usually means either a charitable remainder trust or a charitable gift annuity. These vehicles can be funded with the IRA account proceeds, and the account holder can designate a beneficiary to receive income over that beneficiary’s lifetime. On death, the remaining amounts are distributed to a charity the original IRA account holder designates during life. This gift structure can also work with life insurance policies.

The CARES Act: In 2020, to provide relief to the pandemic the CARES Act was passed. Among its many other provisions, it increases the 60% limit for cash donations during 2020 only to 100% in some circumstances. This deduction is available only for cash gifts to charities that are not donor advised funds or supporting organizations. Nonetheless, it provides a considerable benefit for certain cash-rich donors. It may also benefit trust-form charities accepting S-corporation stock, since the significant tax bill incurred by the sale of those assets may be counteracted by a corresponding (and deductible) grant to a qualifying charity.
These new laws can provide new ways for many donors to give. With a bit of additional planning, they can even provide enhanced benefits, like lifetime income for a family member or increased charitable dollars.

As always we are here to answer any of your questions. Feel free to fill out the form below or contact us directly for a free consultation at (561) 995-0064

Meals and Entertainment Expenses regulations were released this week by the IRS (T.D. 9925). The law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97 – that implements provisions that disallow a business deduction for most entertainment expenses.

The standard of business deductions for food and beverages remain deductible, generally limited to 50% of qualifying expenditures, and how taxpayers may distinguish those expenditures from entertainment.

The final regulations provide a number of clarifications in response to comments, proposed regulations issued in February 2020 (REG-100814-19; see also “Proposed Regs. Issued on Meal and Entertainment Expense Deductions,” JofA, Feb. 24, 2020). The proposed regulations were based, in turn, on Notice 2018-76, published in October 2018.

Sec. 274(a)(1)(A) generally do not allow a deduction for any activity of a type generally considered entertainment, amusement, or recreation. Before their deletion by the TCJA, effective for amounts paid or incurred after Dec. 31, 2017, the subsection allowed several exceptions, including for entertainment that was preceded or followed by substantial and bona fide business discussions. The TCJA did not repeal other exceptions under Secs. 274(e)(1) through (9), including, for example, certain recreational activities for the benefit of employees, reimbursed expenses, and entertainment treated as compensation to an employee or includible in gross income of a nonemployee as compensation for services or as a prize or award (and reported by the taxpayer as such).

The TCJA similarly removed a reference to entertainment in Sec. 274(n)(1) with respect to the 50% limitation of deductibility of food or beverages, but it left that provision otherwise intact. Also remaining with respect to food or beverage expenses are the Sec. 274(k) general requirements that they not be lavish or extravagant under the circumstances and that the taxpayer or an employee of the taxpayer is present when food or beverages are served. Food and beverages must also be an ordinary and necessary business expense under Sec. 162(a).

The TCJA also applied the 50% limitation on food or beverages to de minimis fringe employee benefits under Sec. 132(e) (unless another exception under Sec. 274(e) applies), that previously was not subject to it. Therefore, business taxpayers are required a separate deductible meal expenses from nondeductible entertainment expenses, and the regulations address how this is done in a variety of circumstances.

It basically states that food or beverages are not included for “entertainment” purposes of Sec. 274(a), unless they are provided at or during an entertainment activity and their costs are not separately stated from the entertainment costs.

The regulations that were finalized state that food or beverages must be provided to a “person with whom the taxpayer could reasonably expect to engage or deal in the active conduct of the taxpayer’s trade or business such as the taxpayer’s customer, client, supplier, employee, agent, partner, or professional adviser, whether established or prospective.” Accordingly, the final regulations apply this definition to employer-provided food or beverage expenses by considering employees as a type of business associate, as well as to the deduction for expenses for meals provided by a taxpayer to both employees and non-employee business associates at the same event.

The final regulations added several new examples to the proposed regulations and slightly modified others in response to comments asking for clarification. The final regulations are effective upon their publication in the Federal Register. Taxpayers may also rely upon the proposed regulations for expenses paid or incurred after Dec. 31, 2017.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) contains a business relief provision known as the employee retention credit, a refundable payroll tax credit for “qualified wages” paid to retained employees between March 13 and December 31, 2020.1

As a reminder, employers whose business has been financially impacted by COVID-19 can take advantage of the Employee Retention Credit, a refundable tax credit designed to encourage businesses to keep employees on their payroll. The credit is worth 50 percent of up to $10,000 in wages paid by an employer. Employers that are eligible for the credit for the first and second quarters of 2020, can apply for the credit when they file their second-quarter filing of Form 941, Employer’s Quarterly Federal Tax Return, which is due July 31st.

Available to all employers regardless of size, including tax-exempt organizations with only two exceptions: State and local governments and small businesses that make small business loans. Qualifying wages are based on the average number of a business’s employees in 2019 and are divided into employers with fewer than 100 employees and employers with more than 100 employees.

When employers report their qualified wages on Form 941, they can reduce their required deposits of payroll taxes withheld from employees’ wages by the amount of the credit. Eligible employers also may use the employee retention credit with other relief including payroll tax deferral and can also request an advance of the employee retention credit by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. Please call our (561) 995-0064 office with any questions.