As in the past, the law directs the IRS to disallow deductions for entertaining deemed "lavish or extravagant" under the circumstances. Still, an understanding IRS realizes that hosting a first-class bash is not necessarily lavish or extravagant.

Example: The feds might be a tad skeptical when your explanation for uncorking a $400 bottle of wine is that it enabled you to sell $1,000 worth of photo equipment, but nod agreeably if it helped you to land a megabucks advertising assignment.

Tax reform retains a 100-percent deduction for some kinds of home entertaining. There is no 50-percent cap when, for example, you use your home to host social gatherings for employee’s office parties or summer picnics or some of the standard get-togethers. At that kind of socializing, business does not have to be discussed before, during or after the event. Note, though, that there is a full deduction only for an affair that is open to employees generally--the rank and file, not just the top executives or other higher-ups.

There is another hurdle if you are an employee and are not reimbursed for your entertainment expenditures. The law requires you to include those unreimbursed outlays with other miscellaneous itemized deduction, such as fees for preparing returns, on Schedule A of Form 1040. Most miscellaneous expenses are allowable only to the extent that they, in the aggregate, exceed two percent of your adjusted gross income. Check with your tax professional how this works.

Need additional information? Consult IRS Publication 463, Travel, Entertainment and Gift Expenses. For a free copy, call 1-800 TAX-FORM (allow at least 10 workdays for mailing) or check to see if you can pick it up at the IRS office serving your area. Many libraries also have copies of this and other IRS tax guides. IRS Publication 910, Guide to Free Tax Services, provides a complete list of booklets and explains what each one covers.