Issue 1, 2018

9 www.ortrucking.org Issue 1 | 2018 The disallowance of entertainment expenses and other fringe benefits had many changes and some of those include the following. Under the new law there will be no deduction for the expenses of entertainment, amusement, or recreational activities. No deduction will be allowed for membership dues for any club organized for business, pleasure, recreation or other social purposes. Expenses will remain deductible if included in the compensation of an employee. Taxpayers can still deduct 50% of the food and beverage expenses associated with operating their business. These changes take effect for amounts paid or incurred after 2017. The driver meal allowance of 80% under the Transportation’s “hours of service” limits did not change, however drivers that take a per diem deduction on Schedule A under 2% miscellaneous deductions will no longer be able to as of January 1, 2018. The new tax law has limited the deduction businesses can take on business interest expense for those businesses with revenues in excess of $25 million. Business interest is now limited to the sum of interest income plus 30% of taxable income before tax, depreciation, and interest. Any disallowed interest in a given year can be carried forward. For example, a trucking company with $1 million of taxable income before depreciation and interest expense, with $500,000 of interest paid during the year, would only be allowed a $300,000 deduction, with $200,000 carried forward indefinitely at the entity level, not the partner or S corporation shareholder level. If your average gross receipts are $25 million or less, this limitation does not apply to you. Be certain to discuss how these changes and all of the new tax provisions impact your business with your tax professional.