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Business Meals Deduction


Businesses can deduct 50% of the cost of business meals if the business owner (or an employee) is present and the food or beverages are not considered lavish or extravagant (if they are reasonable based on the facts and circumstances).

The meals may be provided to a current or potential business customer, client, consultant, or similar business contact.

The meal (like any other business expense), must be considered ordinary and necessary.

 The 50% allowed deductible meal limit applies to employers, employees, and to self-employed persons (including independent contractors).

Taxes and tips relating to a business meal are included as a cost of the meal and are subject to the 50% limit.

The 50% limit applies to meal expenses you have for the production of income, including rental or royalty income, and to the cost of meals included in deductible educational expenses.

The 50% meal deduction limit does NOT apply in the following situations:

1-Recretational, social, or similar activities such as a holiday party or picnic.

2-If you provide free meals to the general public as a means of advertising or promoting goodwill in the community.

3-If you actully sell meals to the public as your primary business such as a food cart, restaurant, or other similiar activities.

Recordkeeping Requirements:

The following records must be kept to document and substantiate the business meals deduction:

1-Date and location of the meal

2-Total amount

3-Business conducted

4-Who was present and their relationship to the business

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