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  • Peter F Cicciari EA

Business Meals

Business meals

TCJA eliminated the deduction for entertainment and curtailed the

expense deduction for meals. In a very business-friendly transitional guidance

(Notice 2018-76) on the deductibility of business meals, the IRS announced that

taxpayers generally may continue to deduct the food and beverage expenses

associated with operating their trade or business. Under this notice, taxpayers

may deduct 50% of an otherwise allowable business meal expense.

Under Sec 210 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, for

2021 and 2022 (not 2020), taxpayers will be able to deduct 100% of business meal

expenses where the food or beverages is provided by a restaurant. This change

doesn’t help employees, as job-related expenses for employees continue not to be

deductible (through 2025). Keep in mind that for a meal expense to be deductible:

o The expense is an ordinary and necessary expense paid or incurred

during the taxable year in carrying on any trade or business.

o The expense is not lavish or extravagant under the circumstances.

o The taxpayer, or an employee of the taxpayer, is present at the

furnishing of the food or beverages.

o The food and beverages are provided to a current or potential

business customer, client, consultant, or similar business contact.

Final regulation 1.274-12(b)(3) defines “business associate” as a “person with

whom the taxpayer could reasonably expect to engage or deal in the active

conduct of the taxpayer's trade or business such as the taxpayer's customer,

client, supplier, employee, agent, partner, or professional adviser, whether

established or prospective.”

Entertainment is still NOT deductible. No Dodger games ☹

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