Meal and Entertainment Rules

Defined

You may deduct the cost of business related meals and entertainment.

Includes

This includes meals eaten when traveling out of town overnight on business. It also allows for meals purchased for employees for the convenience of the employer. Entertainment is nolonger tax deductible

Limit

Meal expenses are limited to 50%. The remaining 50% is nondeductible. Company picnics and occasional parties are not limited by the 50% rule and are 100% deductible.

Excludes

This excludes the lunch you eat by yourself while in town. All entertainment expenses are now excluded.

Tax Records

Keep cancelled checks, credit card receipts, invoices and meal records. Meal records must include date, place, amount spent, names of people involved and business purpose. Use the enclosed forms to keep track of your expenses.

Tax Strategy

Whenever you can, mix business with pleasure.

Beware

Meal expenses are often disallowed by the IRS and the courts because they are deemed not to be actual business expenses and or they are not properly documented.