by Structured Settlement Watchdog
Ethan Wolff-Mann's Nothing Burger on Pacific Life Sales Conference
An article by Yahoo News' Ethan Wolff-Mann critiqued Pacific Life about the influence of sales conferences in exotic locales ( to groups of only 30 people), but missed a significant provision of the Tax Cut and Jobs Act that could impact such conferences, namely the loss of tax deductions for entertainment expenses
My colleague Mark Wahlstrom surprisingly missed this point during Sequence Media's coverage that seemed to make the story seem like a new revelation, when it hardly was.
Under recent tax reform, the story on entertainment expenses can be boiled down to a simple catch phrase, " The Party's Over".
New Law
No deduction period, is allowed for:
- Any activity generally considered to be entertainment, amusement or recreation
- Membership dues to any club organized for recreation or social purposes
- A facility, or portion thereof, used in connection with the above items
That means no more deduction for a round of golf, theater tickets, spa visit, sports tickets, skybox, fishing, hunting, show tickets, etc… This is a big deal!
Entertainment deductions that survived
There are a few ways to write off entertainment expense under IRC Section 274(e):
- Entertainment, amusement and recreation expenses you treat as compensation to your employees in their wages (essentially put the cost in their W-2)
- Expenses for recreation, social, or similar activities, including facilities, primarily for employees, and it can’t be highly compensated employees
- Expenses for entertainment goods, services, and facilities that you sell to customers…i.e. cost of goods sold
It's not all gloom and doom though as this seriously impacts the inducements that cash now pushers use to groom structured settlement annuitants to sell their structured settlement payments. Novation Funding would not be able to deduct the cost of its representative taking Cedric Martez Thomas to a basketball game, and two other Florida factoring companies would not be able to deduct the cost of taking an annuitant to a strip club (an event or series of events alleged in a legal complaint filed in Virginia) before the "ritualistic" savaging of their victims' structured settlement payments.