Final regulations - Reimbursed entertainment expenses 

July 31: The Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9625) that adopt regulations proposed in 2012 to modify and explain the exception to the section 274(a) and (n) deduction limitations on certain expenditures paid or incurred under a reimbursement or other expense allowance arrangements.

Read the final regulation: T.D. 9625 [PDF 91 KB]

The regulations proposed in 2012 had a goal of clarifying:

  • The definition of reimbursement or other expense allowance arrangements
  • How the deduction limitations apply to reimbursement arrangements between three parties (third-party arrangements)

According to the preamble to today’s final regulations, comments received concerning the proposed regulations were not adopted; thus, the proposed regulations are adopted “without substantive change” by the final regulations.

Read a preliminary discussion of the proposed regulation in TaxNewsFlash-United States (July 31, 2012) [PDF 31 KB]

Effective date

The final regulations apply to expenses paid or incurred in tax years beginning after August 1, 2013—which is the date of the publication of the final regulations in the Federal Register.

Taxpayers may apply these regulations to expenses paid or incurred in tax years beginning on or before August 1, 2013, for which the period of limitation on credit or refund under section 6511 has not expired.

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