The Case Situation Assume you are part on an engagement team at a… The Case SituationAssume you are part on an engagement team at a big four accounting firm located in Minneapolis, Minnesota. Your engagement team focuses its work in the merger and acquisition arena. You have just completed a major acquisition for an important client in which the client invested $75,000,000 of capital to acquire a competitor. The engagement principal at your firm invites you and your spouse, along with all other engagement team members, their guests and the client’s management team and guests, to a celebratory dinner at Manny’s Steakhouse in downtown Minneapolis to celebrate the achievement. Fourteen people in total attend the dinner.Your principal reserves the private dining room for the evening’s festivities. Guests begin arriving at 6 pm and are ushered into the private dining room. Introductions are made and conversations ensue along with cocktails of choice. Members of the engagement team and the client’s management team discreetly share observations, chuckles and a few laughs reliving humorous moments arising throughout the negotiations and due diligence periods. Professional/client relationships are further cemented by this dialogue and comradery. The evening is going well so far.As the cocktail hour wanes, guests are seated and menus are distributed. A copy of Manny’s current menu is attached in Table 1 (“Appendix”). Guests peruse the extensive and expensive dining options. Choices are made, drinks refilled and conversation continues to flow. Appetizers arrive. First time guests are amazed at the gargantuan size of the hors d’oeuvres. Their flavors match their size. Similar responses occur when the main courses appear. Steaks look like roasts, baked potatoes are the size of footballs, and lobsters range to three pounds. It’s dining like you have never experienced. The quantity and quality of the food is utterly amazing.And so is the cost. The engagement team principal shows you the tab for the evening. $3150 before gratuity of $630. Total bill is $3780. You swallow hard and are glad that your credit card does not have to cover it.After the magnificent dinner ended, the entire group headed to the Excel Center to see the Minnesota Wild hockey club play the Montreal Canadians in a match. Fourteen tickets at $100 a piece are added to the principal’s Visa card. You wonder if any of these expenses are tax deductible?THE CASE DISCUSSION QUESTIONSAddress the following questions:Are client entertainment costs tax deductible after the Tax Cuts and Jobs Act of 2017(“TCJA”)?Are business meals tax deductible after the TCJA?Would the business meal at Manny’s restaurant be considered deductible?LawSocial ScienceTax law ACCT MISC
