LIMITATION OF EMPLOYER DEDUCTION FOR CERTAIN ENTERTAINMENT EXPENSES.

SEC. 907. LIMITATION OF EMPLOYER DEDUCTION FOR CERTAIN ENTERTAINMENT EXPENSES.(a) In General.—Paragraph (2) of section 274(e) (relating to expenses treated as compensation) is amended to read as follows:“(2) Expenses treated as compensation.—“(A) In general.—Except as provided in subparagraph (B), expenses for goods, services, and facilities, to the extent that the expenses are treated by the taxpayer, with respect to the recipient of the entertainment, amusement, or recreation, as compensation to an employee on the taxpayer’s return of tax under this chapter and as wages to such 118 STAT. 1655 employee for purposes of chapter 24 (relating to withholding of income tax at source on wages).“(B) Specified individuals.—“(i) In general.—In the case of a recipient who is a specified individual, subparagraph (A) and paragraph (9) shall each be applied by substituting ‘to the extent that the expenses do not exceed the amount of the expenses which’ for ‘to the extent that the expenses’.“(ii) Specified individual.—For purposes of clause (i), the term ‘specified individual’ means any individual who—“(I) is subject to the requirements of section 16(a) of the Securities Exchange Act of 1934 with respect to the taxpayer, or“(II) would be subject to such requirements if the taxpayer were an issuer of equity securities referred to in such section.”.(b) Effective Date.—The amendment made by this section shall apply to expenses incurred after the date of the enactment of this Act.